The Incentives of School Bonds

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Regular readers know I put a lot of emphasis on incentives as a way to understand events and a key consideration when crafting policies.  The $250 million school bond proposed for the November ballot is a good example.

On the front end, the incentive is very strong for school districts and municipalities to let facilities deteriorate.  First, the law is structured to give advantages to labor unions organized at the state and even federal level, creating incentive for them to manipulate the political structure.  Then, elected officials have incentive to tilt budgets toward organized labor, drawing money to compensation.  Next, having learned from that experience over time, taxpayers have incentive to squeeze money out of budgets so that even higher taxes aren’t paying again for things like maintenance that they thought were already included and that might be diverted again if available.

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On top of it all, the near certitude of passing bonds for dire repairs creates disincentive for regular maintenance from the start.  This mechanism creates incentives for financial interests and investors, and the bias toward big projects brings in the incentive that got me thinking of these things.  As Dan McGowan reports for WPRI:

Fix Our Schools R.I., a 501(c)4 nonprofit formed last week, will spend the coming months “educating communities across the state about what this plan is and how it would affect them,” Haslehurst told Eyewitness News. …

The organization lists its address as 410 South Main St., the same building as the Laborer’s International Union of North America. Haslehurst said it will share space with the Occupational and Environmental Health Center of Rhode Island, a nonprofit that has an office inside the building.

A quick look at the health center’s IRS filing shows that it’s a labor union organization, with AFL-CIO poobah George Nee as the treasurer.

‘Round and ’round the incentives go, to the point that running things efficiently — in the way people run their households, planning ahead and all that — seems almost to be an impossible task.  Be skeptical of anybody who tells you that this is a “once in a generation” investment that fixes a problem.  After all, when the debt payments subside, the incentive will be to find more projects in need of debt or to build the payment amount into regular budgets.



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