An installment of Capital Comments written by everybody’s favorite economist, Larry DeBoer, ran in the July 26, Carroll County Comet. Professor DeBoer’s commentary concerns a report (PDF) by the Department of Local Government Finance on 2005 expenditures per capita by local governments. (Senator Kenley had a column in the Indy Star on the report, and I had a blog post.)

Professor DeBoer suggests that the legislature thought it would be a good idea to make comparisons of expenditures per capita by local jurisdiction available so that citizens might be able to ask questions about why some are spending more and others are spending less. However, he says, it’s difficult to know what to make of the reported numbers. First, DLGF says that there are inconsistencies in how jurisdictions report their numbers. Second, operating costs and infrastructure costs are combined. Third, the numbers reported by DLGF don’t seem to reflect patterns seen in previous research such as wealthy jurisdictions spending more per person and jurisdictions with more homeowner property spending less.

Prof. DeBoer notes that at least one pattern that shows up, however. Small jurisdictions spend more per person. Of the 11 counties in the state with fewer than 15,000 people, 9 of them spend more per person than the typical county. The smallest counties averaged $1,570 per person compared to a $1,090 average for all counties. He suggests that this might be a symptom of “economies of size” which I take to mean that there are certain fixed costs for a county which have to be incurred regardless of how many citizens the county has. The bigger counties get to spread these costs over more people.

Last year the General Assembly passed HEA 1362 which might provide some assistance for the smaller counties. It provides a mechanism by which political subdivisions, including the small counties with high overhead, can use cooperative agreements with cities, towns, other counties, or other jurisdictions to deliver services, share equipment and employees, or buy services from one another. Through such cooperative agreements, the small counties might generate the sorts of economies of size currently enjoyed by the larger counties.

An Illinois Republican state senator argues against privatization of Illinois toll roads, at least if the privatization is done without serious study and if the proceeds will be used for the benefit of the State generally rather than the areas served by the toll roads specifically.

Illinois has a toll road privatization effort similar to that under way in Indiana, but the parties rolls are different with the Democrats in control favoring privatization and the Republicans in opposition.

Illinois State Senator Kirk Dillard (R-Hinsdale) writes  that suburban businesses have the largest stake – and the most to lose- in a proposal to lease the Illinois State Toll Highway authority because the region’s toll highway system is the economic lifeline and the way employees and products move about. Tolls shot up, he says, when the Chicago Skyway and the Indiana Toll Road were leased, making it more expensive to get to work or move goods.

Any leasing idea, he contends, should be explored in a thorough process that includes world-class economists, transportation experts and leaders from the areas affected by the toll road leases. Tollway proceeds should be used only for transportation infrastructure in the areas served by the toll roads, not for general purposes or in other parts of the state.

Along with these main points, Sen. Dillard includes plenty of invective against Illinois Democrats, but, aside from that, his position seems remarkably similar to that of Indiana Democrats, particularly those in the northern part of the state.

Via the Indiana Law Blog:

From the docket in the toll road case, BONNEY, STEVE ET AL.-V- INDIANA FINANCE AUTHORITY, ET AL:

6/20/06 ISSUED THE ENCLOSED OPINION:
6/20/06 2006 TERM
THE ORDER OF THE TRIAL COURT IS AFFIRMED. — BOEHM, J.
SHEPARD, C.J., AND SULLIVAN AND RUCKER, JJ., CONCUR
DICKSON, J., NOT PARTICIPATING.
19 PAGES MS

Opinion available here.

The Court found that the Indiana Finance Authority is a “municipal corporation,” despite its statewide scope because of the General Assembly’s Humpty-Dumpty powers of defining words to mean what they wish them to mean. IC 34-6-2-86(1)(B) requires only that the IFA be a public instrumentality or public corporate body created by state law to be regarded as a “municipal corporation.”

The Supreme Court further determined that the Plaintiffs did not raise any substantial issues to be tried. I’m generalizing (and paraphrasing), but the Supreme Court essentially concluded that appropriations are not special legislation and so throwing pork at particular counties to get the Toll Road legislation passed didn’t constitute special legislation.

The Supreme Court further concluded that the State no longer has “public debt” under Article X, Section 2 of the Indiana Constitution. In a footnote, the Court notes that it does not believe that the question of whether the Toll Road transaction is a lease or a sale is dispositive to the Plaintiff’s contention that the statute violates Art. X, Sec. 2; rather it’s the fact that the State no longer has any public debt.

Because state law has set up entities like the Indiana Finance Authority to issue debt secured by money controlled by the State rather than having the State incur the debt directly, there is no public debt, says the Court. The Court also noted that debts of local government do not constitute public debt — a point that makes a lot of sense to me. I did not see how the Court addressed unfunded retirement obligations of the State under PERF and TRF.

The Court appears to have avoided a major confrontation with the Governor and the General Assembly primarily through two definitional maneuvers: “muncipal corporation” doesn’t have to have anything to do with a municipality; and “public debt” doesn’t refer to debt for which the public is ultimately responsible.