POSTED ON NOVEMBER 21, 2007:
He said, they said he said. What did Tulsa County bean counter John Piercey really say?
As pro- and anti-river tax forces battled this summer for the hearts and minds of Tulsa County voters, one of the proposed alternatives to the tax raise was to use surplus Vision 2025 revenue to fund some of the river projects.
On Oct. 9, Tulsa County voters voted "no" to the proposed 4/10-cent sales tax to provide $282 million for river development projects, thereby telling George Kaiser and other philanthropists, "Thanks, but no thanks" for the conditional $117 million donation offered as incentive.
Leading up to the vote, river tax opponents proposed using surplus Vision 2025 funds to help pay for some of the projects instead of a tax increase, but the consistent rebuttal by county officials and their advisors was, "There is no surplus."
While the question of the river tax has been settled, the debate continues about that alleged surplus of Vision 2025 revenue, which has been fueled by recent comments attributed to Tulsa County financial advisor John Piercey.
"Probably over the next 18 months, I could project that there could be between $40 million and $80 million beyond current Vision 2025 commitments," the bond salesman and financial guru reportedly said.
The setting was a recent closed-door meeting between himself, a representative from the office of Tulsa's former Mayor and current Republican U.S. Sen. Jim Inhofe, Ken Levit of the George Kaiser Foundation and Ron Howell, partner in the Cross Timbers development on Skiatook Lake and the man responsible for introducing the Branson Landing developers into the river development equation.
Howell told UTW that Inhofe was concerned that river development "might be losing momentum" after the recent "no" vote and pronouncements by river tax proponents that "river development is dead."
So, while he was successfully working in Congress to override the President's veto of a water-resources bill containing a $50 million authorization for Arkansas River development, Inhofe sent Blu Hulsey, his state counsel, to see what he could do about helping him repeat a success from his days as Tulsa's mayor.
Following the 1979 defeat of a proposed sales tax to construct the low-water dam that would have created Zink Lake, Inhofe managed, with the help of his then-project director John Piercey, to pull together enough private investors to get it done.
With the defeat of the recent proposed sales tax, Inhofe apparently thought history should repeat itself and brought some of the old team together to see what they could do about bringing some more private investors together to help fund two more low-water dams and some modifications to the Zink Lake dam.
Piercey made his comments through the course of that discussion, Howell said.
Been Around the Block
For those unfamiliar with goings-on within the Tulsa County Commission, Piercey is the body's "go-to" guy for financial advice and for the status of Vision 2025 revenue, and was the chief naysayer to proposals to use the surplus to fund river projects instead of a tax increase.
Tulsa City Councilor John Eagleton was arguably the most vocal in his conviction that surplus revenue will come and should be used for the projects.
Based on his calculations, Vision 2025 revenue is already about $40 million ahead of projections since it began collecting in 2004.
Eagleton noted that sales tax revenue has increased 6.24 percent in the past year, and 7.16 percent for 2006.
Assuming an average sales tax increase of three percent for the next 10 years, he projected about $200 million beyond projections in Vision 2025 revenue by the time the tax ends in 2017.
He said Piercey, when he designed the capital financing plan for Vision 2025, only assumed a two percent average growth of sales tax revenue, hence the disparity.
"I agree that the county should use conservative numbers, but it's imprudent to ignore probable growth," Eagleton said.
Piercey, however, said the councilor's math was fatally flawed because he didn't take debt service for the bonds into account.
"If you remove the debt service from your error from your summary, your estimate of $199 million in funds less commitments declines to only $1.35 million," he said in a written response to a presentation made by Eagleton in August before the Tulsa County Republican Men's Club.
"My current estimate is for approximately $80 million plus to be available at the end of the program in 2017," Piercey added.
"This estimate is largely based upon the release of the $40 million Debt Service Reserve fund in 2017. The balance of the estimate results from investment earnings on fund balances/cash flow and excess sales tax revenues," he continued.
Eagleton, though, is sticking to his guns.
"The math is on my side, as are the historical receipts," he recently told UTW.
"I would be glad to meet with the County Commission in public and discuss my Vision 2025 calculations. If my numbers are wrong, they should be able to embarrass me," Eagleton continued.
And speaking of embarrassment, deserved or otherwise, once word of Piercey's more recent private comments leaked, the inevitable "I told you sos" have since inundated him and the County Commission.
"Ha! I don't know where you heard your rumors, but you'd have to ask me about that in 18 months," Piercey told UTW when asked about reports of his remarks.
However, Blu Hulsey of Inhofe's office confirmed that he heard Piercey state, "Probably over the next 18 months, I could project that there could be between $40 million and $80 million beyond current Vision 2025 commitments."
He qualified, though, that the comments were part of a brainstorming session about possible funding sources for river projects.
"This is really in the infancy stage, and that's why we're looking at everything. I think John's just saying we need to look at all options," he said.
Tulsa County Commissioner Fred Perry, though, doesn't recognize the use of surplus Vision 2025 revenues as an option.
"I think it would be great if that money were available, but based on what I've seen, I'm skeptical that there's a surplus," he said.
"It's too speculative--what if you have a downturn toward the end, and you've already spent what you thought was surplus?" Perry added.
If there is a surplus of that magnitude, though, the commissioner explained, $42 million has already been borrowed against future overages to cover the BOK Arena's construction going over budget.
Also, since the city of Tulsa already got such a big piece of the Vision 2025 pie, outlying towns got dibs on any surplus beyond that $42 million, Perry said.
Piercey concurred, but said that "understanding" was reached by Perry's predecessor, and it wasn't legally-binding on the current members of the County Commission, because a previous commission can't determine policies for a future commission.
"But, that's a policy decision that I don't have anything to do with," he added.
What he can do, though, is advise the Commission on what Vision 2025 funds are available.
Piercey still denies that such a surplus exists, or will exist in any definite sense.
He also denies that his comments were as Howell and Hulsey recalled.
"There isn't any change in my analysis since before the river tax vote. What I said in that meeting, I've always said," Piercey stated. "What I said (during the meeting with Howell and Inhofe's camp) is that, over the next 18 months, if they proceed with the engineering that is currently funded out of Vision 2025, we're going to be in a better position to know what funds will be available," he said.
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