A vote for a broadband utility is a vote for a blank check
October 6, 2019
This article was originally published in the Fort Dodge Messenger on September 17, 2019.
Recently, the Fort Dodge City Council decided to put a referendum proposal to allow the Council to establish a new government-controlled broadband utility on the Nov. 5 ballot, doing so under the guise of a purported need for faster, cheaper, more reliable internet service in the City of Fort Dodge.
What they are really putting on the ballot, but what you won’t hear from their highly-paid consultants, is that voting “Yes” on this ballot measure gives the Council and their consultants virtually unfettered discretion and a blank check to borrow unknown amounts to build a system that no one knows whether it will be successful.
When asked at the Aug. 6 public forum how much this project will cost, Fort Dodge’s consultant Curtis Dean replied that he didn’t know. When pressed further, all he could respond with was “tens of millions” of dollars. $20 million? $50 million? $90 million? Mr. Dean couldn’t come up with an answer because he truly doesn’t know. No one does. And when you go to the ballot box, you won’t know either.
So when asking you to vote “Yes,” the Council is really asking you to turn over complete control and responsibility of this very important decision to them. They will then establish a government-controlled utility, which will then hire even more consultants at an even higher price tag to “advise” them about whether a government-owned broadband system is even feasible. By then it’s too late for you to do anything about it.
And, no one even knows what these consultants will charge Fort Dodge’s citizens to determine whether this system even has a chance of succeeding. By way of reference, Charles City has spent roughly $400,000 to find out, while Pella recently authorized the expenditure of over $750,000 to find out the same thing. Given that Fort Dodge is much larger than either Charles City or Pella, it is safe to say that the consultants will be digging even deeper into your pockets, which can then all be done without further approval by the residents of Fort Dodge if you vote “Yes.”
You also need to ask yourselves this question – does the City of Fort Dodge have hundreds of thousands or millions of dollars lying around to spend on more consultants? And if it does, is this speculative venture the best use of your taxpayer dollars?
But let’s say the referendum passes and the government-owned utility decides to borrow the “tens of millions” of dollars needed to build this system. Who is on the hook if it fails? The Council has been told that no taxpayer money will be spent on this system. (By the way, so far Mr. Dean has been paid with money from the City’s sewer fund.) Mr. Dean’s own words from his report for the City of Decorah, however, makes it clear that ultimately “the City is on the hook” for missed bond payments if the broadband utility can’t make them itself. Which means taxpayers are “on the hook.”
The consultants will tell you that’s not likely to happen and that this is all being made up to get you to vote “No.” But all you have to do is look at the City of Muscatine. Not long ago, Muscatine’s government-owned broadband utility had $25 million of debt forgiven, funds it had borrowed from Muscatine’s electric utility. Now Muscatine’s electric utility is out $25 million, and its electricity users have to make up the difference. Several other government-owned broadband systems have failed as well, each time leaving taxpayers, electricity ratepayers, or someone else holding the bag for tens of millions of dollars of shortfalls, because the consultants overpromised and then underdelivered.
A government-owned broadband system is far from a sure thing. A “Yes” vote on this referendum gives the Council and its soon-to-be-formed utility a blank check to find out, a vote that will be taken without very important questions being answered. This referendum vote is the Fort Dodge citizens’ only chance to have a direct say in this decision. Until much more information is gathered and disclosed to the voters, a “NO!” vote on this referendum is the only one that is fiscally responsible and makes common sense.
Chip Baltimore is a Senior Fellow of the Taxpayers Protection Alliance, a former eight-year state representative, and an attorney licensed in both Iowa and Missouri.