Math doesn't work

Lamont

The recent Whitman County commissioners’ decision to borrow $15m instead of $9m for the Hawkins development doesn’t make economic sense.

According to the article in the Gazette, they are expecting total tax revenue to increase somewhere between $11m and $18m over 20 years-if the project is successful.

Let’s assume it is and I’ll keep the math minimal.

The County has to pay at least 1% interest to upwards of 5% interest on the borrowed money.

At 1%, that means $150,000 a year in interest payments alone or $3m over 20 years.

Total cost (Principal + Interest) is $18m.

At the 5% interest rate, we pay $750,000 per year or $15m over 20 years in interest alone.

Here the total cost becomes $30m.

So in the best case scenario of both 1% interest costs and the maximum of $18m in tax revenues (and no compound interest on the borrowed money), the county barely breaks even.

However if interest costs are above 1% or revenue is less than $18m we lose.

At 5%, the County will pay twice what they receive in tax revenue.

It could be a loss of almost 3 times if we only get $11m in revenue.

There is a reason for open government. It allows for careful discussion and thoughtful decision making. The leaders have to explain what they want to do and the citizens get to point out the good and bad parts of the idea. This hopefully results in wise decisions.

I believe every Republican in Whitman County should be objecting to how this matter was handled. We should also be supporting Commissioner Largent and Prosecutor Tracy. They tried to stand for what was right.

Art Swannack,