Today the council approved the issuance of $164.5M in bonds in March 2010. We will also issue $350M in commercial paper in October. Borrowing this money is going to increase our debt payment next year by about $6.8M. At a time when next year’s budget is facing critical cuts, I cannot support the extent of this bond sale.
We need to move forward on bond projects which are critical to maintaining and improving our city’s infrastructure. We’ve seen what can happen when we are derelict in our upkeep — we face more expensive fixes in the future. We can also recover substantial savings on projects we undertake right now while construction costs are down. But we must be very judicious and conscious of what our city budget will look like next year, and borrow only the amount of money we can afford. This year’s budget cut not just fat, but muscle and bone. We laid off employees, cut city programs and reduced services to our citizens. For next year’s budget, we’ll have to cut even deeper if we don’t want to raise property taxes. Given that reality, it doesn’t make sense for us to dig ourselves $6.8M deeper into the hole.
Instead, we should borrow slightly less money this year so that we won’t have to pay more in debt payments next year. We could reduce the March tranche of bonds just slightly (to eliminate the $1.3M in next year’s additional debt service) and reduce the October commercial paper sale a little more (to eliminate the $5.5M in additional debt service). When we get a better idea of our financial condition in the coming year, we can consider rescheduling any delayed project as soon as it’s financially responsible and we can afford it.
For these reasons, I voted against the city manager’s proposal, which will increase our budget expenses by $6.8M next year. (All other councilmembers supported the proposal.)