The 1999 SPLOST vote: A morality tale

In a previous article, I explained how the Fayette school board had scheduled SPLOST votes in March 1998 and in September 1999, and how a majority of the voters said No each time. The board wanted the 1 percent sales tax from SPLOST to build new schools.

Each of these elections was a special election, with no other issue on the ballot. Thus, each election cost the Fayette taxpayers at least $25,000, an expense that could have been avoided had the issue been presented as part of a general election.

But the board realized that many voting precincts are in public schools, where parents often drop off or pick up their children. The strategy was to keep a low profile, hope most people would stay home, and snatch the Yes votes of parents eager to deflect the threat of having their children taught in trailers, and those of the teachers too.

Stunned by its 1998 defeat, and prevented by law from bringing up another SPLOST vote for a full year, the pro-SPLOST faction decided to regroup and organize better through a campaign committee composed mostly of parents determined to get the extra tax.

One outspoken leader in that effort was Janet Smola, who was to become a school board member after the November 2000 election.

Many people had come to recognize that sales tax income trickles in slowly, too slowly to provide the full funding needed to build schools right away. Practically speaking, bonds were still needed to produce the full cost of a school, up front.

Combining bonds and a sales tax and having the sales tax revenue pay for the bonds looked like an elegant solution. It was a solution that also preserved the business of bond underwriters.

One investment firm had realized this, too, and had begun to promote a special service to protect its bond business. If a school system would agree to give the firm its bond business, the firm would help the school system sell the SPLOST to the voters.

It didn’t take long for the campaign committee to boast in local newspapers that the firm of A.G. Edwards was providing expert assistance in its campaign and was expected to underwrite the bonds if the sales tax measure passed.

An Aug. 11, 1999, article in The Citizen quotes A.G. Edwards Managing Director Todd Barnes as saying school employees [teachers] and their spouses could make the difference with the expected 25 percent or lower voter turnout, and that 600 Realtors had pledged to support the tax.

The idea was to get 15 percent of those registered to vote to foist the tax on the other 85 percent.

Under Georgia Code section 21-5-30.2, school districts are forbidden from making, directly or indirectly, any contribution (anything of value) to a campaign committee.

Even without this law, it was obvious to me that this whole arrangement failed the smell test. So far as I know, the school board is obligated to seek bids and pick the lowest bidder who can provide assurances of doing the job right. Anything else smacks of bribery or payola. (My position later found support in a January 2005 Bloomberg Markets magazine article titled “States, Cities Shun Finance Competition, Victimizing Taxpayers.”)

In this case, I reasoned that the assistance A.G. Edwards provided through one of its paid employees had value, and that the promise to pay a fee to A.G. Edwards, even if contingent and bundled up with compensation for other services, had value and represented an indirect and illegal contribution by the school board.

Since it appeared no one else in the community was repulsed by this conduct, blatantly revealed in the newspapers, I myself filed a complaint with the State Ethics Commission under the Ethics in Government Act.

The commission’s executive secretary, Teddy Lee, a lawyer clearly quite knowledgeable with that kind of work, thought enough of my complaint to come to Fayetteville to investigate. That afforded me the opportunity to show him the newspapers and campaign promotional materials which disclosed the whole scheme. He determined the complaint was valid and arranged for a hearing to be scheduled before the commission.

The sales tax vote took place on Sept. 21, 1999, about a month before the hearing could be held. The vote was 5,580 yes, 6,015 no. The clever strategy to win the election had failed.

When the Ethics Commission hearing was held at the state capitol in Atlanta, all five members of the school board showed up, along with the school board lawyer; the A.G. Edwards representative showed up with his big-firm lawyer too. That would signal their solidarity and give them two shots at arguing their case.

The commission’s executive secretary presented the case as prosecutor and explained it quite well. It was after all a simple case. The defendants’ lawyers were prompt to point out that their clients had lost the election. Thus, there’d be no payoff for the A.G. Edwards firm.

When it came time to decide, the three members of the commission who were present did not leave the room to consider the evidence or deliberate among themselves like a jury does.

The first one invited to speak explained he did not see the point of taking any action. The second one then said he felt the same way. The third one, who would otherwise have been in the minority anyway, realized his vote no longer mattered and thus voted like the others. The Fayette School Board heaved a sigh of relief.

Eventually, the school board got around to calling an election on pure school bonds, without a sales tax, in November 2000, a year later. This time the voters went along.

Now you guess the name of the investment firm to which the school board gave its bond business after that vote. It was A.G. Edwards. (This firm merged into Wachovia in 2007.)

[Claude Y. Paquin, a Fayette County resident, is a retired lawyer and actuary.]