Comment: We associate a current Governing Magazine article by Liz Farmer, below, with Matt Buxton's excellent News Miner review of Alaska gas pipeline project funding.  

We have long alerted readers that with government participation in the traditional, private market comes an unintended list of future consequences to be faced by not only this, but future generations of public officials who had little or nothing to do with the original public funding decisions.  

Current and future citizens, in these circumstances, should be prepared to absorb the same risks taken by a private investor — the risk of losing or wasting some or all of the investment.  

If public officials present public spending proposals without fully disclosing the risk, they violate the very disclosure statements and objective, due diligence research, undertaken by prudent investors of corporations, trusts, partnerships and participants in loans, lease agreements, sales contracts, divorce settlements and other transactions.  

As in all of life's business dealings, citizens approving the public use of funds to purchase or participate in private projects should hold dear the age old maxim: Caveat emptor (Let the buyer beware").  -dh

Fairbanks News Miner, by Matt Buxton.  Even though the state has approved millions in funding, selected a global infrastructure development company and approved millions more for infrastructure in Fairbanks, it’s clear that getting natural gas off the North Slope is still a “massive undertaking.”

The Alaska Industrial Development and Energy Authority’s Board of Directors met in Anchorage on Wednesday to hear an update on the Interior Energy Project, with the most critical part being the progress on a natural gas processing facility on the North Slope.  More here.

Governing Magazine, by Liz Farmer.  This is part of the ongoing Finance 101 series that breaks down the basics of public finance for public officials.

The temptation of the quick fiscal fix has seduced just about every lawmaker at one time or another….

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What follows is Governing’s list of the most tempting financial schemes that can severely weaken a government’s fiscal future….

1. Balancing the Budget with One-Time Fixes

States and many cities have a legal obligation to balance their budgets each year. But there are all sorts of tricky maneuvers ….

2. Ignoring the Long-Term Consequences of a Deal 

Few governments have a long-term financial plan and even fewer have multiyear budgets. Many don’t even require ….

3. Taking on Too Much 

… development projects funded by municipal bonds.

4. Misapplying a Temporary Windfall 

Every economic boom is followed by a bust, but elected officials are often tempted to spend money as if that weren’t true, using one-time surpluses ….

5. Shortchanging Pension Obligations

… chronic unwillingness by lawmakers to contribute what is necessary to keep the plans fully funded.

6. Making Unrealistic Projections About Rate of Return 

…targeting a pension funding level that’s lower than what most people might consider prudent,” says Donald Fuerst….

7. Ignoring Financial Checks and Balances

…where there are many different ways to count the same revenue, weak financial controls can lead to serious dollar losses