Municipalities borrowing money from other governmental agencies

From "The Smithfield Herald"

Clayton secures $1.8 million loan

Clayton -- N.C. Gov. Mike Easley on Wednesday announced that the state would loan the Town of Clayton $1.8 million for a sewage project.

On Thursday, Town Manager Steve Biggs said Clayton would use the loan to build a system to pump treated wastewater to Pine Hollow Golf Club on East Garner Road.

The golf course will get water for irrigation, and Clayton will end up pumping less wastewater into the Neuse River, Biggs said.

"It will reduce the amount of nitrogen discharged into the river," the town manager said. "That is beneficial to the environment."

Easley likewise called the loan a benefit for Clayton and the environment. "This type of investment is key to the area's success in pursuing economic development opportunities and for improving the environmental performance of its facilities," the governor said.

The County of Johnston has a similar system that can divert wastewater to farms, nurseries and golf courses instead of the Neuse River.

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The reason I wanted to quote the story is that I have an issue with towns borrowing money from another government agency, regardless of the level of government. Governments sometimes have to borrow funds to accomplish projects for the public good. OK, no problem. However, borrowing from the federal or state government seems to be irresponsible to the tax payers, in my opinion. Yes, the town may get a lower interest rate. However, the tax payer has to fund the lending government in order to be able to lend the cash AND pay the town's debt. Basically, we are taking it on the chin on both ends, and that is just not wise tax money management. To tax me twice to pay one debt is just plain wrong. It should bother you as the tax payer to be paying twice for the same debt. Private lending institutions are in the business of lending money. Governments should not be.

I was quoted in "The Smithfield Herald" as stating this very position a while ago. I still stand by this position.