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Giving the sugar or paying off debt?

How should Dixon spend its $40 million from the Rita Crundwell settlement and seized assets?

We recently went to the Dixon Public Library to ask residents that question. 

They talked about using the money to improve streets, help youth programs and renovate the pool. 

No one suggested paying off the city's debt. 

Shortly after the city announced its settlement with its former bank and auditors over the Crundwell scandal, Paula Meyer, the city's finance director, proposed paying off all of the city's debt. 

The city has external debt of more than $12 million. Over time, the city could save money by paying off its debt now. The city has nearly $9 million in debt to its restricted funds such as the ones for the cemetery, pensions and water.

Meyer's proposal may be responsible, but not as appealing. 

In the late 1990s, the United States government started seeing budget surpluses for the first time in three decades. How long did the good times last? Just 4 years. 

The more responsible path was to use the surpluses to pay down the debt, which would lower interest costs over time, ultimately allowing the government to cut taxes in the long run.

But politicians wanted to give the sugar right away.

In his 2000 Republican convention speech, George W. Bush said, "This surplus is not the government's money. The surplus is the people's money."

That led the way to tax cuts after he was elected. And Bush and Congress raised spending, too. Not surprisingly, deficits returned. 

The same scenario likely would have played out with a Democratic president.

Recently, Dixon held a town hall to get public input on how to spend the settlement money.

One resident called the money a "windfall." Another, Geoff Vanderlin, took exception to that wording. "This is getting back the money we should have been spending all along," he said.

A former city finance commissioner, Walter Lohse, also made an important point. He advised against spending the money on large capital projects.

"Those projects should stand on their own merits through referendum," he said. 

Right now, the large capital project of choice is renovating the old Memorial Pool. Indeed, a number of people at the town hall wore "Save the Pool" shirts. A few years ago, an advisory referendum showed voters opposed spending money on a pool.

Last year, the big push was for the construction of an athletic and activities complex for the school district, but voters rejected a tax increase to pay for it. This project is apparently now out of fashion because not a word was said about it at the town hall. 

In an interview, Mayor Jim Burke told me he is for paying down the debt. 

"I think the whole council is pretty much on board with that," he said. "We're going to go slow with what we're doing."

David Giuliani writes for Sauk Valley Media. You can reach him at dgiuliani@saukvalley or 800-798-4085, ext. 525. 

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