Thursday, June 28, 2007

So wrong on so many levels - low-interest loans to buy art

Well, it's been a couple of days since this story was in the local paper, The Blade, but it got me so angry on so many levels that I've just now been able to blog about it.

Apparently, our county commissioners don't think that enough people are buying art, so they've decided that they're going to help. (Nice of them, huh?) You see, people who want to buy art, aren't always able to because of the cost - so, according to Comm. Ben Konop, there's now a program to make it 'more affordable.'

Under the new 'economic development' program, individuals who qualify can get a loan of between $500 and $2500 at an interest rate of 1% to purchase a piece of local art. The maximum amount that Key Bank will loan under this program is $25,000.

And why would Key Bank make such a program available? It's because they're going to get a $250,000 investment from the county in the form of a certificate of deposit...and they're only going to pay 1% interest for the cd.

So...instead of the County Treasurer, Wade Kapszukiewicz, getting the best rates for the county, he's agreeing to this investment which, according to his office, means that the county treasury will be out $7,881 (the difference between the going interest rate and the 1% that will be paid).

And please don't advance the argument that "it's only" a small amount of this case, the issue is not the amount of interest that's NOT going into the county treasury, it's the mistaken philosophy that public funds should be used to advance social issues.

From the article:

"County Treasurer Wade Kapszukiewicz said he is always looking for ways to use the "financial resources of the treasurer's office to move the county forward.""

In doing research on this, I could find nowhere in the Ohio Revised Code that detailed this as one of the responsibilities of the office of treasurer. But I did find plenty of references to 'safe' or 'secure' investments including the following:

"Safety, liquidity and earning a market rate of return on the county's money are primary responsibilities of the Treasurer."

Further, the State Auditor has issued a manual for county treasurers which states:

"The main goal of the county treasurer is to coordinate the county spending with the active/inactive funds. The desire is to match short-term needs with the short-term deposits, and to match long-term needs with long-term investments. It is fiscally irresponsible to invest short-term funds in a long-term investment. This matching can be achieved by coordinating spending with estimates of income. Open communication is necessary between the auditor and the treasurer to plan the timing of the investments. The portfolio should be managed to maximize interest rates while keeping risk to a minimum." (emphasis added)

So, if the investments should be managed to maximize interest rates, has our treasurer done this? Nope! He's decided that, instead of maximizing interest rates, he's going to help people buy art.

Then there is the whole issue of a the program itself. If the county commissioners were going to provide a program of low interest loans, is buying art the best target of those loans? What about purchasing a vehicle - that would generate more than the $300 in sales tax that they estimate the art sales will provide. Or maybe a recent high school graduate would like a $2500 loan at 1% interest to help pay for college. Or maybe you'd like to redo your kitchen - wouldn't YOU love to have a 1% interest loan for that? How about any other purpose - landscaping your yard, putting up a new fence, buying a new big screen tv, or even a vacation?

And what are the qualifications for such loans? The article doesn't say, but is it likely that people who qualify aren't really in NEED of a loan to purchase art? And do we think that people who don't NEED a loan to purchase art will still take advantage of this program?

If I was planning to purchase a piece of art at $2000, I could invest $2000 in any number of ways that would generate more than 1% interest, but let's use the county's rate of 4.157%. Such an investment would give me about $83.

Then, I could take out the loan at 1% and purchase the artwork. The interest on the loan will only be $20. So I get the artwork AND I make $63 doing so. And I do this at the expense of the county treasury and all the county taxpayers. Sounds like a great deal to me!

I know that there are a lot of people who are firmly convinced that the best investment for a community is art - everything from subsidized rent to this kind of a program. But 'art' is in the eye of the beholder and it's so completely subjective.

My preference is that we prioritize better.

Our county jail is in serious need of attention - individuals with multiple court cases are never held to account because their crimes are non-violent misdemeanors so they are released without ever going to court due to the Federal Court Order on overcrowding in our jail - not to mention all the security issues and recent problems well documented in our local media.

Our historic County Courthouse has needs that have been detailed for years by the judges. What about all the individuals who've appealed their property tax valuation - any decrease in property valuation means a decrease in property taxes resulting in less money in the county treasury. I'm sure there are many other things that you think would be more important than using county tax dollars as a guarantee for artwork loans.

But as of today, other than the media report on the day of the announcement, no one's said a thing. So remember - any lack of opposition to a decision is perceived by our elected officials as being support for the decision, leading to similar types of actions in the future. Make your opinions known.


BizzyBlog said...

This is a flat-out breach of the treasurer's fiduciary duty to taxpayers with commissioner support.

Pressure should be brought to bear on the county prosecutor (I know, in my dreams) to stop this. All he or she would have to do is point to what you pointed to. Short of that, a taxpayer suit might be needed.

Maggie Thurber said...

I was thinking more of the state auditor...there'd at least be a level of objectivity from that office...

Brian said...

We truly need a national debate to define what government is. Unfortunately within our schools and universities the academic community has taught that government is there to be change agents, nannies, art philanthropists, care takers, gambling halls, recreation centers...the list goes on. But what is the only purpose; to provide the services necessary to promote good order and security. But when government steps in and replaces the role of the family, and I say the church, we get stupid actions such as you described. Our elected officials and non-elected bureaucrats have this baseless notion that they some how know what is best to do with our money and how we should live.

We need a fundamental shift in this socialist thought.

BizzyBlog said...

If that's the case, it's something Mary Taylor could and should go after.

Luke said...

I believe the US Constitution does provide for the preservation of the arts. However, that is not in the County Charter so far as I am aware.

I commented about this on Ben Konop's blog, but I think the whole thing is a waste of time, money and energy. They're practically giving our money away for nothing.

Maggie Thurber said...

Luke, the only reference in the Constitution to 'arts' is this:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

Which basically is patents - not the use of public tax dollars for works of art.

Additionally, County Commissioners, being an 'arm' of state government, are bound by the Ohio Constitution to perform only the duties so prescribed to them. If the Constitution is silent on an issue, then commissioners have NO AUTHORITY to do anything about it.

From the County Commissioners Handbook, available at, is this:

County government does not possess home rule authority. That is to say, county officials may act only when and as specifically authorized by state law. An 1857 Supreme Court case established a general theory of the status of counties which is still relevant today.

The court stated:
"Counties are local subdivisions of a state, created by the sovereign power of the state, of its own will, without the particular solicitation, consent, or concurrent action of the people who inhabit them.... With scarcely an exception, all powers and functions of the county organization have a direct and exclusive reference to the general policy of the state, and are, in fact, but a branch of the general administration of that policy. (Hamilton County v Mighels, OS 109)."

So, since the state constitution does not authorize such programs, it would seem that commissioners can't do it. But when you have one commissioner who publically stated "I take a different view...that if the Constitution is silent on the issue, we can do whatever we want," it's no surprise that such programs exist.

Brian said...


We need more folks like you teaching our public administration courses, rather than the loony Post Hole Diggers.

Maggie Thurber said...

Brian - thanks for the confidence in me...but I don't have a masters and therefore don't qualify for teaching at most colleges or universities...

not that I'm complaining, mind you...

-Sepp said...

Art loans? I have a local art museum that I can go to. These jokers have lost their friggin minds.

Hooda Thunkit said...

This just the latest demonstration that we have lost control of our government.

Thanks Maggie for the education, but it's a bit sad to see our local governments increasingly socialistic tendencies being allowed to continue unchallenged like they are.

Seems like the State is blind to these illegal shenanigans too. . .

Roland Hansen said...

Wade Kapszukiewicz should be removed from office.
I have been trying to alert the voters about this guy for the past decade. He is nothing but a political opportunist who has only himself in mind. He has so many people believing otherwise.
He will do or say anything to advance his personal political ambitions and aspirations. It's all political posturing.
I've said it publicly before and I'll say it again, I was in the "back room" with Wade and the 'D' leadership back in 1995 when the political future and strategy of WK was formulated.
Does no one listen?

Kurt said...

One thing you may be missing here, Maggie, is that consumer spending creates more economic growth than government spending. Essentially, by giving people 1-year loans at an interest less than the rate of inflation, the consumers are actually saving money when they purchase art work, the businesses get a full cut, and more money is turned over in the local economy. It's essentially the same concept as a tax break. Now if you compare that to government spending, where they waste so much money on bureaucracy, this money is going a lot further in the hands of those who get these loans, and the businesses that collect. Consumers get roughly a 2% discount due to inflation(which is why any consumer interested in purchasing art should use this program) and businesses get the whole cut. That money leads to jobs and more economic investment in the private sector. Just something to think about.

Bizzyblog, I didn't realize the treasurer had a fiduciary duty to taxpayers. Since he is an elected official, it seems that he is mandated by the voting public to do this.

Maggie Thurber said...

Kurt - I recognize that the purchase of any product is better for our local economy than if the government spends money. That's why I questioned the decision to subsidize the particular purchase of ART. If you're looking to subsidize the purchase of a local product, why not pick one that has more economic impact - like a vehicle. Comparing sales tax revenues and employment impact, the purchase of a car generates more economic impact than the purchase of art.

This is only one aspect of the bad decision. If the 'purpose' is economic development, then the 'investment' should be used for the best economic returns.

And how can you place a value on a college education? Many studies try to do this through earnings potential - which, in the long term, generates more economic impact than the purchase of $25,000 worth of art.

So the question I raised is a valid one - IF they're going to subsidize the purchase of anything, why ART? Because that's what the commissioners like - or because that's what this special interest group wants.

And if you're going to subsidize the purchase of one local product, why stop there? Why not subsidize the purchase of Jeeps, or yacht club memberships, or landscaping services, or lawn mowers, or anything? I think this is where some would use the term "slippery slope."

As for the fiduciary duty of the treasurer, I believe his duty is to the residents of the county - whether a taxpayer or voter or both.

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