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That is the exact claims that Strong Towns takes issues with. You are simply stating that exact claim over and over again as fact. Those very claims are exactly what Strong Towns is presenting it's evidence against. They literally title part two as "Cobb County’s Triple-A Bond Rating is a Joke". You cannot respond to that argument with simply "Cobb has a AAA bond rating" and expect people to give that response any validity.
Pensions is also discussed in part two. It has it's own section. You have not addressed anything about that despite me bringing it up multiple times.
These are all pieces of the same series of articles I posted. There are no shifting arguments beyond that. But if you want to argue against the article you will need to be able to look up and defend why it's many points are wrong. But you are on no timer, take your time. The articles link to Cobb's budget where they pull most of their numbers if you want to use their sources.
For example this very graph keep posting from Cobb's budget that shows principal payments going down and interest payments rising (the opposite of a normal amortization table). Do you think that is a sign of a healthy sustainable debt?
And you still have not answered the other points either:
I have. Cobb County has low debt levels.... I trust an industry of professional analyst from multiple competing companies over a biased blog with missing information.
You haven't shown they have high debt levels, just that they do have -some- debt and pension obligations. Those things are highly common of most large governments.
So again.... your meandering evolving arguments/subject is missing critical links to the big picture of Cobb's financial health.
First step to fixing a problem is admitting there is a problem.
Funny that we can have posts critical of budget issues / stadium subsidies in Gwinnett or City of Atlanta and most people in the thread don't care, join in with criticism, and or have a productive conversation about solutions. Yet as soon as something is said about Cobb you go on the defensive, attack the source, and start reassuring one another of how great everything is in Cobb.
What's up with that?
Quote:
Originally Posted by toll_booth
This.
People tend to conflate criticism of an institution or a government with attacks on that institution or government.
Cobb can be a fine place to live and at the same time have a government that deserves a lot of criticism. Same with Atlanta, or DeKalb, or Georgia...
To have low / manageable debt levels a municipality should have total debt less than 10% of total local revenues.
Cobb is not disclosing all their debt obligations. Only their general obligation debt. Cobb's general obligation debt is 7.8% of local revenue which is below the 10% for total debt.
Those payments for that general obligation debt are $21M a year.
But Revenue Bonds are not included in that amount. They are hidden in "transfers out" which totals $22.4M a year. Pensions are even larger at $55M a year. Then things like liability for future maintenance on infrastructure is also entirely absent from the books. They also clearly have some unsustainable math going on with their principal / interest ratios (see graph I keep posting).
All of that implies that Cobb is way, way over that 10% level when other sources such as revenue bonds, pensions, and maintenance liabilities are included.
Again, this is very poorly simplified. You need to read the entire section (and more if you are not familiar with any of these terms / concepts, I know I had to look up some of the stuff).
Lastly, here are the same questions you keep avoiding time and time again while simultaneously accusing me "meandering evolving arguments":
Quote:
Originally Posted by jsvh
Ok, tell me what you think Strong Towns means by "Ponzi Scheme". What evidence would you need to see to agree with that as being an accurate metaphor for a municipalities' finances?
Quote:
Originally Posted by jsvh
...They also show examples (using Cobb's own graphics) of debt payments increasingly going to interest instead of principal in order to keep the debt payments down (but results in debt pushed out to future generations instead of paid off).
Do you doubt that Cobb's pensions are only 52% funded and that is one of the lowest levels in the state? 10 years ago City of Atlanta was in deep trouble because their pensions was 53% funded and so in 2009 Mayor Reed lead a massive, politically painful, overhaul of the pension system to get it on track. Do you think Cobb might need to do the same?
Do any of you seriously think there are not debt / budget problems in Cobb? Do you really think this one tax increase has solved the budget issues?
What do you think is a sustainable ratio of tax payers to miles of infrastructure?
1 block west of the square is the barrier, residents immediately west of the square can't even walk to it because of an uninviting and unsafe 5 lane stroad.
Nonsense. I was on the south Loop at Whitlock last night, having picked up Cuban food at the little restaurant just south of the Walgreens. (Delicious food, by the way.) Three separate small groups of pedestrians safely crossed in front of me and the other cars, in the crosswalk, in just one rush hour light cycle. On a weekend, when there's a large festival or something on the Square, the foot traffic coming from that direction is much higher.
Meanwhile, the walkable area east of the Square is vast, and is where the bulk of the redevelopment has taken place. It extends at least as far as Fairground Street. I live three-quarters of a mile from the Square, as the crow flies, and can get there on foot via sidewalks the entire way, not encountering anything remotely resembling a busy intersection until I reach the Square itself.
I have. Cobb County has low debt levels.... I trust an industry of professional analyst from multiple competing companies over a biased blog with missing information.
You haven't shown they have high debt levels, just that they do have -some- debt and pension obligations. Those things are highly common of most large governments.
So again.... your meandering evolving arguments/subject is missing critical links to the big picture of Cobb's financial health.
The same industry of professional analyst that gave AAA ratings to mortgage-backed securities? https://youtu.be/mwdo17GT6sg
Nonsense. I was on the south Loop at Whitlock last night, having picked up Cuban food at the little restaurant just south of the Walgreens. (Delicious food, by the way.) Three separate small groups of pedestrians safely crossed in front of me and the other cars, in the crosswalk, in just one rush hour light cycle. On a weekend, when there's a large festival or something on the Square, the foot traffic coming from that direction is much higher.
Meanwhile, the walkable area east of the Square is vast, and is where the bulk of the redevelopment has taken place. It extends at least as far as Fairground Street. I live three-quarters of a mile from the Square, as the crow flies, and can get there on foot via sidewalks the entire way, not encountering anything remotely resembling a busy intersection until I reach the Square itself.
east of the square is not cut off by a 5 lane stroad. Glad to see people walking from Whitlock, but the Loop does create a barrier around the square.
To have low / manageable debt levels a municipality should have total debt less than 10% of total local revenues.
Cobb is not disclosing all their debt obligations. Only their general obligation debt. Cobb's general obligation debt is 7.8% of local revenue which is below the 10% for total debt.
Those payments for that general obligation debt are $21M a year.
But Revenue Bonds are not included in that amount. They are hidden in "transfers out" which totals $22.4M a year. Pensions are even larger at $55M a year. Then things like liability for future maintenance on infrastructure is also entirely absent from the books. They also clearly have some unsustainable math going on with their principal / interest ratios (see graph I keep posting).
All of that implies that Cobb is way, way over that 10% level when other sources such as revenue bonds, pensions, and maintenance liabilities are included.
Again, this is very poorly simplified. You need to read the entire section (and more if you are not familiar with any of these terms / concepts, I know I had to look up some of the stuff).
Lastly, here are the same questions you keep avoiding time and time again while simultaneously accusing me "meandering evolving arguments":
My claim is supported by 3 ratings agencies and the financial bond markets.
Your claim, which is just you posting a link again and again, is a biased internet blog.
They have not met the burden of proving what they want using real industry accounting standards. If you're going to make an argument that the standard ratings agencies agree that Cobb has a AAA rating using standardized accounting standards, then the burden is on you and/or the blog to do a full accounting that says otherwise. So far ST has not scratched the surface, aren't doing a full accounting of Cobb, and aren't using standardized accounting principles in their blog.
For starters, they focus on only Cobb's general fund of a bit over $380m in their discussion, however Cobb has and maintains different purpose driven budgets with different sources of revenues and expenditures.
They're actual overall budget of revenues and expenditures is $936 million.
They discuss a few transfers between funds, but never actually look at what they are across all funds. They also ignore they are accounted for (and therefore known to the ratings agencies) across all their budgets.
The chart you keep posting again and again isn't even a chart of all Cobb's debt services. It is a single chart about a low-interest loan program between the state and Cobb's water department. It is one of 2 separate water related capitol funds related to a $223m/year water system that currently funds it.
The problem is they aren't really processing and analyzing all of Cobb's budget as much as cherry-picking only a few details and not connecting all dots using real accounting standards.
You aren't really either and you're asking me to do more to rebute an article, when all your doing is posting a link over and over. There is a problem to the burden of argument, you're asking.
Again at this point, the burden is still on them to do the accounting. They haven't done so.
You've also kept ignoring a critical argument. Cobb has untapped revenue potential in the form of low-taxes. This is critical to how bond agencies analyze the fiscal stability of the county. They look at all revenue potential of a county producing a $936+million budget that is balanced with real revenues.
-(Note: Keep in mind this is for County level property tax only; not schools, not city, etc..)
They are not only looking at revenue for the general fund alone and then cherry-picking debt service funds across all different budgets that are outside the general fund alone. In accounting terms.... it's pretty intellectually dishonest and they haven't proven their argument.
In the mean time all 3 ratings agencies examining a full budget built using all industry standards that show and account for all transfers between all funds see Cobb's debt levels as low and maintain a AAA bond rating.
The same industry of professional analyst that gave AAA ratings to mortgage-backed securities? https://youtu.be/mwdo17GT6sg
multiple problems with this argument your trying to be clever with by attacking the ratings agencies overall...
First and primary: Your cherry-picking.
All bonds and securities represent a risk, including all governments to be fair. That means there will always be some misses. So you can always cherry-pick a single miss as an argument for ignoring all the other good analyses of everything else that held true, but that is not good practice and most financial professionals know this.
Second: When a ratings agency conducts ratings, they only rate a bond or security against the market for securities of that type alone and within their own sub-sector. Different types of bonds or securities generally carry different levels of risk, So a high ranked bond in one sub-sector is not the same as a high-ranked bond in a more risky sub-sector.
Governments, especially larger ones in North America, are usually a far, far more stable risk than the broad market.
A government is not a mortgage-backed security.
That means Cobb's ability to maintain a AAA bond rating has it's risk analyzed against its sub-sector other local municipal bond issurers only. (ie. issuing a bond to Cobb is less risky than issuing a bond to a lower rated municipal government)
Third: Local governments generally have to report more information by law, so their accounting standards, their revenue, and income is far more transparent than the private market. Which again means... less risk and why many consider municipal bonds to be less risky than other types of investments.
So yes... I get rating agencies sometimes have misses, but that doesn't mean all independent analyses is null and void. Just the opposite, it's usually accurate far more often and the reason investors listen to it. It's the best analyses there is.
cwkimbro, That is exactly the problem. The only real source for numbers on Cobb (and most municipalities) is the county itself and they do not use GAAP (Generally Accepted Accounting Principles) used most everywhere else in the financial world.
If they were using GAAP they would be required to be more transparent and have to report numbers such as their maintenance liabilities.
Legitimate concerns about Cobb's budget has be raised and the onus is now on Cobb to release additional information to disprove those concerns / you to refute them. The onus is not on me / or Strong Towns to keep providing to you the same points over and over different ways and you to respond with "No. You need to provide more information." The onus is on you now to refute these claims.
Also, again you still are still avoiding these questions (and yes, I was aware that interest / principal trend graph was not representative of the entire county's debt):
Quote:
Originally Posted by jsvh
Ok, tell me what you think Strong Towns means by "Ponzi Scheme". What evidence would you need to see to agree with that as being an accurate metaphor for a municipalities' finances?
Quote:
Originally Posted by jsvh
...They also show examples (using Cobb's own graphics) of debt payments increasingly going to interest instead of principal in order to keep the debt payments down (but results in debt pushed out to future generations instead of paid off).
Do you doubt that Cobb's pensions are only 52% funded and that is one of the lowest levels in the state? 10 years ago City of Atlanta was in deep trouble because their pensions was 53% funded and so in 2009 Mayor Reed lead a massive, politically painful, overhaul of the pension system to get it on track. Do you think Cobb might need to do the same?
Do any of you seriously think there are not debt / budget problems in Cobb? Do you really think this one tax increase has solved the budget issues?
What do you think is a sustainable ratio of tax payers to miles of infrastructure?
Cobb is increasing it's property tax rate 34% / 2.152 mils. That will move it half way down this list. So your "critical argument" that "Cobb has untapped revenue potential in the form of low-taxes" is quickly going out the window already.
Do you really think that tax hike will permanently solve Cobb's budget issues?
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