When politicians ask the public to vote for big, glamorous projects (like new stadiums or convention centers), they often claim that these projects won't raise taxes. Instead, the government will simply issue bonds to cover construction costs. But raising taxes and issuing bonds are really one and the same thing, and here's an explanation why.

If we compare how governments borrow money with how businesses borrow money, we find out why there's never enough money to cover basic services, like transportation, road maintenance, or emergency medical services.

Governments have to borrow money to finance large projects, just like businesses do. When borrowing money, a business usually does one of three things: it takes out a loan, issues stock, or draws on a line of credit through a bank. In all of these cases, the business pays interest on the money borrowed to finance the project. In the case of issuing stock, a company usually pays a quarterly or yearly dividend to its shareholders (lenders), which is similar to interest. The higher the dividend the company pays, the more its stock is worth on the market (investors really slurp up those high-paying stocks!). The higher the stock value, the more money the company can collect when it needs to borrow money again by issuing more stock, and so on.

Governments, on the other hand, are barred from issuing stock, but they can issue bonds instead. Bonds are not simply "sold" to bondholders. No investor would pay $30,000 just for a piece of paper. Bondholders buy bonds because they pay interest. When the bond reaches maturity, the government pays back the full amount of the bond to the bondholder, thereby paying back its loan. Bonds are issued with different maturation dates so that the government doesn't have to pay them all back in the same year.

However, governments are limited in the amount they can borrow, just as you have a limit on your personal credit card. If a government borrows too much money, then it may have problems paying back all of the bonds it has issued. In theory, it would then default on the outstanding bonds. In practice, however, governments never declare bankruptcy and get their debts forgiven like individuals and businesses do. Instead of defaulting on the bonds, governments simply raise taxes (yours and mine) to cover the shortfall, or cut social services and redirect the money to pay off the debt (sometimes referred to as "belt-tightening" or "austerity measures"). That's why investors consider government bonds to be a very safe investment: bondholders will always get their money back, even if it means the general public gets a property tax increase, or single moms get kicked off welfare.

It's obvious why our roads are in shitty shape, and why people voted down a tax levy for emergency services in King County. Funds for road maintenance and emergency services used to come out of the general fund, but those monies have been redirected to pay the debt on enormous boondoggles, like the bus tunnel and the Convention Center--which has operated at a deficit since it first opened. We've already added a couple of new projects to the debt load: two new stadiums in Seattle (one an obvious give-away to Paul Allen) and the opening of an international convention center at the Bell Street Pier (which directly competes with the downtown Convention Center).

It's also no mystery why people voted for the monorail initiative. We're all tired of waiting for local politicians to get off their butts and do something about the RTA (other than searching for ways to dig a tunnel under Capitol Hill). And those of us who ride the bus during rush hour are sick of standing shoulder-to-shoulder like sardines in a can, while politicians glibly encourage more people to ride Metro as the only solution to traffic congestion. Furthermore, the monorail initiative specified that the project would be funded in part by an increase in the B&O (business and occupations) tax, not an increase in property taxes. Maybe people are smarter than we give them credit for.

Unfortunately, that didn't stop suburbanites from voting for the Seahawks stadium. They fell for the number-juggling and outright lies of the pro-stadium campaign. It's more important than ever for people to understand that issuing bonds is just another way for the government to increase taxes and decrease basic services. We're just now beginning to pay for the boondoggles built five to 10 years ago; if we don't stop now, this trend will only get worse.

--Maria Tomchick