Borrowing to pay debt a sad story in Ogdensburg

Where Ogdensburg once had industry, it now has polluted land and crumbling buildings. Where it once had jobs and a strong tax base, it now has polluted land and crumbling buildings. It is hard not to feel bad for the only city in St. Lawrence County.

The once-grand city on the St. Lawrence River was struggling to make ends meet long before the rest of the nation got caught up in the current economic crunch. When the rest of the world was booming, Ogdensburg was on the edge of busted. Needless to say, the recession didn’t help things much.

The current problem is that the city doesn’t have money to pay its debts. And as dire as that sounds, it gets worse. The city this month is expected to borrow money to pay off a debt. Sort of like using a credit card to pay off a credit card – when all is said and done, you still have debt. And as dire as that sounds, it gets worse.

A tax anticipation note is the fancy name for the loan the city is expected to get. As the name implies, collateral for this loan is tax money the city expects to collect next year. So the city is paying off one debt with borrowed money that it will pay back with taxes that it couldn’t collect this year and that helped lead to the debt that it needs a loan to pay. OK, I’ll admit that might have been hard to follow. But you don’t have to be Suze Orman to think that this kind of financial management might have a cousin named Ponzi.

And as dire as that sounds, it gets worse. The debt the city has to pay is owed to St. Lawrence County. First, a very quick lesson in how tax collection is supposed to work here: The city collects taxes for the county. The city takes the money it collects and sends it to the county. Here’s how it actually has been working: The city collects taxes for the county. The city spends that money but promises to pay it back.

In some worlds, that would be called stealing. In the world of Ogdensburg government, using money that is not yours to cover day-to-day expenses is called, “dealing with a cash flow problem.” Can you imagine what would happen to a bookie who collected gambling wagers for organized crime but then spent the money before handing it over to his boss? Cash flow would be the least of his problems.

It is hard not to feel bad for Ogdensburg and the financial problems it faces. The city didn’t drive away industry. The city didn’t pollute its land. The city didn’t do anything that made the national economy crash. It is a victim of a lot of circumstances, struggling to get through some real hard times. Unfortunately, when you get to the dire point of having to borrow money to pay off a debt, things more than likely are going to get worse before they get better.