I know what you’re thinking. “Wow, Angela, you must be psychic. How else to explain your eerily accurate prediction one year ago that the impending economic recession would reduce revenue to the city, reveal the city’s budget forecast as overly optimistic, and necessitate mid-year service cuts?”
Indeed, how else to explain it other than telepathy?
I began dabbling in the clairvoyant arts last year around this time in an effort to see into our city’s financial future. I started out by reading tea leaves (and by “tea leaves” I mean “newspapers”), which foretold ominous fiscal tidings: Lehman Brothers would file for Chapter 11. AIG would go down in flames. Bank of America would take over Merrill Lynch.
And that wasn’t all. My crystal ball/television revealed more otherworldly insights: Fannie Mae and Freddie Mac would be placed in conservatorship. Congress would plunge $700 billion into Wall Street to try to stop the hemorrhaging. And Washington Mutual would become the largest bank failure in American history. Ahem.
All of these things came to pass just days before the City Council approved last year’s budget. I shared these mystical insights with my colleagues and urged them to reconsider the budget before them — a budget that relied on optimistic revenue projections. I, along with Councilmember Rasansky (who himself often evidenced an uncanny prescience in financial matters), suggested a more conservative budget and proposed $45 million in cuts.
I warned my colleagues that if we failed to read the signs and portents and Dow Jones, if we failed to make the tough cuts now, we would be forced to make even more difficult budget cuts in six months due to lower than expected revenue. We could either plan for the crisis or let the crisis overtake us. It would mean the difference between thoughtful, targeted reductions that spared core services, versus reactionary, hacking cuts to any program or office with unspent funds.
Unfortunately, the rest of the council and the mayor scoffed at my and Mitchell’s grave prognostications and passed the unrealistic budget over our protests.
Six months later, sales tax revenue had dropped so far below budget projections that City Manager Mary Suhm instituted a hiring freeze and began cutting the budget. That’s tough to do mid-year, especially under such exigent circumstances. And by the end of the year, it turned out that the city had overestimated revenue by about $45 million. Too bad nobody saw it coming.
So here we are, a year later, about to approve next year’s budget, and I’ve got some new predictions.
I’ve been staring into this budget for weeks, and here’s what I see: The city is going to get into too much debt in the coming year — borrowing $355 million. That won’t hurt too much next year, but it could devastate us the following year when our debt repayment goes up by $24 million. (To put that in perspective, that’s the entire budget for our streets department or our code department.)
Where will we get this money? That’s when my powers of insight fail me. Short of raising taxes, I can’t foresee any way to cobble together the additional millions of dollars that will be needed to repay our debt. We’ve already cut our budget to the bone; cutting another $24 million would reduce city services to an unacceptable level and might actually threaten our infrastructure. Since there’s no reason to believe we’ll be getting additional revenue, where is this money going to come from?
We can avert this crisis by paring down our debt as we weather this recession. Let’s borrow $140 million next year instead of $355 million. We’ll still be able to complete plenty of bond projects, but we won’t increase our debt repayment the following year. We can extend our bond program by a couple of years, and make it through these tough times without saddling our citizens with crippling debt.
Unfortunately, I don’t see that in the cards. Instead, I have a vision of our mayor and City Council making a grave mistake in passing a budget we can’t afford, and Dallas taxpayers suffering the consequences.
On a totally unrelated note, this came to me in a dream last night:
The harbinger of mutual destruction will wear a spotted cloak
and plunge a great city into dark indenture.
Caution will be rewarded as treachery.
Vassals shall wither under false levies.
No idea what it means.