Thursday, March 29, 2012

A Trifecta: Crystal Ball, Déjà vu, and GBL all in one swell foop

Yesterday, your loyal correspondent watched the video of Tuesday night’s special town council meeting, called to discuss selling the McLellan building back to Bowdoin College.  The proposal would raise about $2 million in instant one time cash for the School Department, which is aggressively seeking a bailout to cope with fiscal ‘surprises.’

You can watch the 40 minute video here.  We did not attend the meeting in person because of illness.  It seems you did the same.

Before giving you our report, you might reread these posts to set the stage:

  1. Why be petty at times like this? and
  2. So what’s the betting line in Perfect, LT Ben?

After you do, let us remind you of this principle, which we have posted many times in the past, and if tradition holds, will find ample reason to post many times in the future:

“Nobody spends somebody else's money as carefully as he spends his own.”

(Posted below is a footnote that expands on this point. Special thanks to the Mackinac Center for Public Policy.)

Let’s get to our report;  here are what we consider the meeting takeaways:

1) The blitzkrieg troops amounted to a platoon or so of armored school supporters. Armored means fully shielded from any challenge or opposition by the purity of their intentions and sincerity. 

Air cover will be provided by The Ostrich and various new media outlets set up to ensure the schoolies can conduct their movements with zero losses.

2) The chase: the council voted 6-3 not to accept the Bowdoin College offer to take the McLellan building off the town’s hands for a figure reputed to be $2 million.  But only after discussion so sincere and passionate as to moisten one’s eyes.

3) A modest amount of hand-wringing and teeth-gnashing over the increased estimates for the new Police Station was in evidence.

4) The old Times Record building was mentioned, reminding us of the town’s distinguished record in planning, acquiring, and utilizing various facilities.  You could say this acquisition demonstrated the town’s expertise at due negligence, the polar opposite of due diligence. 

The town bought the facility for what seemed to be a very attractive price (less than $1.5 million), only to be shocked, shocked that it would take something like $5 million or more to turn it into a useful property.  Apparently there was no way of knowing this before closing the deal.  (It’s because of the Pelosi principle; you have to pass the bill to find out what’s in it;  perhaps the most egregious and bizarre example of government ineptitude ever heard.)

5) Which brings us to the McLellan building.  Acquired in a swap with Bowdoin College for the Longfellow School, it was portrayed as a deal too good to be true, always a good sign.  If we heard the discussion  correctly, the initial position was that the building was ready to be occupied by the town with no further investment required. 

That very quickly became $100 thousand in work to adapt it, which was then increased to $200 thousand by the Town Manager, ‘just to be safe.’  In a matter of months, based on conversations with two possible contractors, this number has been raised to $800 thousand, though no plans have been drawn or approved.  You’ve heard of slippery slopes; this is what you call a ramp.  (Now would be a good time to ask yourself if you can ever remember such an estimate being too high.)

Mention was made at the meeting of renovations vs. ‘complete gut and rebuild,’ indicating that discussion already encompasses the worst case.  We recall frequent official reminders that renovating and/or ‘repurposing’ an existing building usually costs more than tearing it down and building a new one.  Looks like you have to acquire a building to find out what it needs inside.

So it may well be that in the fullness of time, our prediction that
$2-3 million in modifications will be needed to ‘bring the building into compliance with town needs’ will turn out to be true, if not low.  The estimates are increasing by more than $100,000 per month, and municipal offices are not supposed to take occupancy until 2014.  You can do the math.

6) Finally, and most important, virtually every member of the Town Council emphatically, and for the public record, pandered to the schoolies and their angst over the purported school budget crisis.  We called this ‘GBL’ in the title, standing for gratuitous boot licking.  They committed to dealing with the artfully fabricated school budget crisis as their number one priority.

Not one mention of ‘spending’ was made as all present swore their support for school financing. Only revenue problems and the ‘bump in the road’ of base closure were mentioned. Ignoring irrational increases in per student spending and sizable operating surpluses amounts to deliberate negligence.

Fine; let’s examine the town council’s powers in such matters.  They have no authority to meddle in the details of the school budget.  The only option they have is to accept or reject the school budget bottom line that goes before the voters in June.  In the past, they have demonstrated their authority by asking that a $30 million budget be reduced by token amounts, usually well less than $100,000.

The only other relevant authority they have is to set the property tax rate for the coming year.  So we ask you – when they swear their commitment to come to the rescue of the School Department, what do you think they mean?

Unless you know something we don’t, it can only mean one thing.  If you can’t figure out what it is, you need to speak to LT Dan.

If we were ‘King for a Day,’ here’s one way we would handle the so-called crisis.  We’d direct the town councilors to take out their checkbooks, in public, and write a check to the School Department to demonstrate their leadership when they speak as they did on Tuesday; minimum amount $1,000. 

Then they’d put up a collection jar for the adoring public to make their donations.  They would set a new rule: speaking in favor of spending increases and higher taxes is $250 per minute, or $1,000 for five minutes.  It’s the ‘put your money where your mouth is’ approach to school financing.  A nice added touch would be having an adorable child staffing a ‘save our schools’ kettle, and ringing a bell at appropriate moments.  Out in the hallway, others could be selling Kool-Aid packets.

From time to time we’ve mentioned the choice faced by elected officials: you can govern, or you can spend.

Tuesday night, the town council made it clear what side of that choice they come down on.  To a person, they in effect said on the public record to the school establishment: ‘just tell us how much you need, and we’ll make it happen; you have our word.’  Face it; they have no other way of manifesting their devotion.

The bottom line takeaway: the Council will bow down to the School Department and raise taxes to what ever level they require to stop the sobbing.

Which means doing the best they can to make our ‘betting line’ come to pass, if not worse.  You can take that from the bank.

Put that in your crystal ball and smoke it.


1.  Expansion on spending somebody else’s money:

Ever wonder about those stories of $600 hammers and $800 toilet seats that the government sometimes buys? You could walk the length and breadth of this land and not find a soul who would say he’d gladly spend his own money that way. And yet this waste often occurs in government and occasionally in other walks of life, too. Why? Because invariably, the spender is spending somebody else’s money.

Economist Milton Friedman elaborated on this some time ago when he pointed out that there are only four ways to spend money. When you spend your own money on yourself, you make occasional mistakes, but they’re few and far between. The connection between the one who is earning the money, the one who is spending it and the one who is reaping the final benefit is pretty strong, direct and immediate.

When you use your money to buy someone else a gift, you have some incentive to get your money’s worth, but you might not end up getting something the intended recipient really needs or values.

When you use somebody else’s money to buy something for yourself, such as lunch on an expense account, you have some incentive to get the right thing but little reason to economize.

Finally, when you spend other people’s money to buy something for someone else, the connection between the earner, the spender and the recipient is the most remote — and the potential for mischief and waste is the greatest. Think about it — somebody spending somebody else’s money on yet somebody else. That’s what government does all the time.

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  1. Mr. Poppycock,

    Here's an idea. Since the town seems unable to make sensible real estate decisions, maybe they should consider selling all town owned properties and then continue doing what they do working out of RVs. Could the town possibly screw that up too?

    How many RVs would be needed - maybe a dozen or so? Of course they would need to be gold plated so there could be a one time capital hit, but a ton of property would go back on the tax rolls.

    A forward looking idea for a town enamored of such.


  2. nice opinion.. thanks for sharing...