As a local government official, I take my fiduciary responsibility very seriously. As such, I, along with a number of other officials through out the State, are concerned about recent actions by the State of Florida.

Over the past year, state officials have made the mistake of infusing unnecessary “noise” into the financial markets, specifically; the hyperbolic rhetoric associated with a failed ballot initiative followed by a contentious special session regarding, quote, property tax “reform”.

For a year, in an attempt to promote an arbitrary tax cut scheme, top state officials have talked down confidence in local governments ability to expend their finances in a fiscally responsible manner, creating a false perception in the markets that Florida’s local governments are excessive and irresponsible in their expenditure of public funds, and that their ability to acquire public revenue should be severely restricted.

Today, with public confidence in Florida’s local governments shaken, and the disclosure of the SBA’s investments for the Local Government Investment Pool being inappropriate, followed by the unprecedented shut down of the fund, while not in reality impeding local governments’ ability to repay or issue debt, HAVE created an unrealistically negative investment narrative which has shaken credit markets and further evaporated confidence.

Over the past month, we have not seen leadership from the State as it relates to this unfolding crisis. The inaction from the State and its fiscal managers have lead to uncertainty that is unacceptable when you are dealing with taxpayers funds and municipal investments.

I need to be very clear, that our Leon County Investment Oversight Committee, comprised of the Clerk, Assistant County Administrator and three Citizen appointments, have acted in a fiscally responsible manner for the taxpayers of Leon County. With the information available, the members of the IOC, with the full support of the board of County Commissioners, acted quickly and prudently, and eliminated an unacceptable exposure to risk.

I have read media reports about “a herd” mentality that occurred after some media reports on November 13. To be clear, Leon County’s Investment Oversight Committee met on Nov. 9 and discussed information that had become available regarding exposure the SBA had as it relates to the sub-prime market, which was prior to the Nov. 13 media reports and State press conference.

The committee took this information into consideration and voted unanimously to remove the County’s assets from the SBA. They didn’t make a big deal of this, no press releases or phone calls. They acted as all good investors do with the information available. They continue to balance the risk versus return on our investment portfolio for our community.

The information that was being shared by the State did not provide any assurances regarding what the magnitude or depth of the problem or any recommended actions on how the State was going to address it.

On November 14th, Bloomberg reported that $2.2 billion of debt held by the SBA had been cut to junk status. Florida rules require the state’s short-term investments to be only top-rated, liquid securities, so taxpayers aren’t placed at unnecessary risk.

Harvey Pitt, former chairman of the US securities and Exchange Commission stated, “Investment of public money needs to be carefully conducted and thoroughly researched. This is no the place for “seat of the pants” judgements. It requires a lot more than jumping on the latest investment du jour to improve your results.”

On November 15th, Bloomberg reported, the SBA had invested taxpayers money in some of the most confusing, opaque and illiquid debt investments ever devised.

Joseph Mason, Finance professor at Drexel University in Philadelphia and a former economist at the US Treasury Department state, “They’re making a giant jump into a new product area which has unknown, unforeseen risks.”

Again, according to Bloomberg, the red ink from subprime caused Merrill Lynch & Co., the world’s largest brokerage, a $2.24 billion 3rd quarter loss and $8.4 billion wrtiedown.

Communities that proceeded to react to this type of news and limit their exposure all behaved appropriately as the information being shared by the state was not reassuring in the least.

Although this is a time of deep concern, I am also positive that we can move forward towards a positive resolution.

The current investment pool needs to be maintained and it will take strong leadership and vision from the Governor and cabinet to regain the confidence of local government financial managers.

However, the investment pool is too important a device to let fail.

As a past President of the Florida Association of Counties, Chairman of the Leon County Board and three-term County commissioner, I understand that the SBA has a long tradition of being the most safe of investments for local governments.

I am confident that it can again be that investment tool and I am requesting that we as local governments provide what ever support we can to ensure the viability of the fund going forward.

For this to happen we will need to see clear signals from the Cabinet that they will be transparent about the process and that they want to work towards this end.

I look forward to their meeting tomorrow and am confident that we will all be pleased with the result. As a local government official, I am extremely proud of our ability to provide needed services to our community and of our management of our limited resources.