Theft at the Public Till
most citizens and even watchdogs roll their eyes and adopt a glazed look. That approach is dangerous. West Virginia municipalities trusted their cash balances (the money on hand between the time they collect taxes and when they spend the cash) to an investment pool run by the State. This seems reasonable - indeed, the theory was that the State would have greater effi- ciencies by pooling all of the localities’ cash. The theory is a good one, but implementation was weak. Financial management techniques evolve for both the public and private sectors, yet with the public sector hemmed in by civil service laws and a reluctance to pay market wages for those professional skills which command large salaries, the pace of evolution has been barely a crawl. The State officials involved did not understand that the investments they were making -- which seemed to be producing returns significantly above the market - involved interest rate risks. The market turned. The “above market” returns from prior months had been distributed as income. But in reality there were no “above market” returns. What had come in was the State’s own cash -- cash that had already been distributed to municipal- ities for spending. Peter had been robbed to pay Paul. Paul had spent the money not knowing it was ill gotten gains. “So what?”, you say. Not a “so what” to the West Virginia taxpayers who had to make up the difference. Not a “so what” to the citizens of the towns which got extra cash. Not a “so what” to the patients of the hospital that didn’t got built or the school that was not to be. The West Virginia story has since then been repeated in state after state and town after town. Remember Orange County California went from AAA rated to bankrupt in the blink of an eye. Unintended redistribution. This is no different from Denver. Who intended that you and I should be paying for that airport? Unintended redistribution. Money taken from you and given to some one else without your permission. Opportunities taken from you and/or your children without your knowledge or consent. Others obtaining benefits that we pay for but never acquiesced to. Theft.
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