The Marin Post

The Voice of the Community

Blog Post

John Parulis

SMART Wasting Tens of Millions on Debt Service

SMART-Burn2.png

SMART – Marin and Sonoma's 2 year old rail system, is having serious fiscal problems. "This year, the rail agency will spend nearly $17 million on debt service — 43% of its tax revenue."

https://www.petaluma360.com/news/9943699-181/smart-predicts-modest-growth-in?sba=AAS

Wow, close to half of SMART's revenue. Wall St or big banks are making a killing on our sales tax. So in effect, we're paying taxes so the rich who own the bonds, can get richer.

As Public Banking champion, Ellen Brown writes:

"While American politicians debate endlessly over how to finance the needed fixes and which ones to implement, the Chinese have managed to fund massive infrastructure projects all across their country, including 12,000 miles of high-speed rail built just in the last decade. How have they done it, and why can’t we?

A key difference between China and the US is that the Chinese government owns the majority of its banks. About 40% of the funding for its giant railway project comes from bonds issued by the Ministry of Railway, 10-20% comes from provincial and local governments, and the remaining 40-50% is provided by loans from federally-owned banks and financial institutions. Like private banks, state-owned banks simply create money as credit on their books. (More on this below.) The difference is that they return their profits to the government, making the loans interest-free; and the loans can be rolled over indefinitely. In effect, the Chinese government decides what work it wants done, draws on its own national credit card, pays Chinese workers to do it, and repays the loans with the proceeds."

Full article: https://ellenbrown.com/2017/05/17/if-china-can-fund-infrastructure-with-its-own-credit-so-can-we/

Some years ago I attended a private party at Damon Connolly's home which was honoring Ellen Brown and the work of the Public Banking Institute. Why isn't Connolly using his role as a SMART director and his role on the bully pulpit of Marin Supervisorhood to promote public banking in the state? Isn't saving 17 million in interest payments siphoned off to private bond holders a worthy goal?

FACT: During the 2008 Great Recession, the only state in the USA that operated in the black was North Dakota, which happens to be the only state which has a state owned bank, the BND. The BND was credited with helping the state stay out of financial stress because of its commitment to its citizens rather than shareholders.

California legislators are on a taxation binge now as they look to build more housing in the state and gut tax protections that have existed for decades. If they are truly committed to the notion of "affordability", shouldn't they be promoting a proven way to save billions in interest payment on the debt?

Tags

SMART, SMART Debt, Measure Q, Public Banking, Ellen Brown, Damon Connolly, Sales Tax