Ellington

Faced with the prospect of deep, unpopular cuts in public services, it's no wonder the Jackson City Council is mulling a plan to free up cash in the near term. The city says its proposed debt refinancing would save the city $18.3 million in debt service over the next five years but add $10.8 million to its long-term debt.

Jefferson County, Ala., should serve as a cautionary tale for Jackson's leaders. That county nearly went bankrupt in 2008, after rising fees from interest-rate swaps—complex derivative deals meant to reduce the county's debt service from water and sewer bonds—ballooned during the credit crisis.

In response, Alabama Gov. Bob Riley signed a law this April requiring Jefferson County to open any interest-rate swap deals to competitive bids, hold public hearings before engaging in swaps or issuing substantial debt and disclose all payments from the deals. Alabama learned the importance of financial transparency the hard way, and Jackson should learn from its mistakes.

Hinds County offers an example even closer to home. The county Board of Supervisors entered its own interest-rate swap in 2006, and the firm that helped orchestrate the deal says it has brought the county $4.5 million over four years. County officials are hard-pressed to explain how they spent the money, though, and independent audits warn that the county could be liable for $11.77 million if it ends the swap early.

The specifics of municipal finance are hairy, heady stuff, and city leaders must be wary of deals that can leave Jackson debt-ridden for decades. And citizens must stay on top of these deals and demand complete transparency at every step; a lack of attention on our part opens the door to huge taxpayer debt in the future, whether based on unscrupulous deals or simply because the people making the deals didn't fully understand what they were agreeing to.

For weeks, the Jackson Free Press has asked the city to fully disclose specific details of its negotiations with potential convention center hotel developers. Our fear is that the council will be asked to vote on a proposal before the public has a chance to fully vet the specifics.

This must not happen. It is simply unacceptable to have anything less than full transparency, especially in touchy economic times. The public must help decide whether delayed risk is worth it. Don't shut us out.