Today the Council considered selling $330M in bonds to pay for projects that were approved by voters in the 2006 bond program (and some prior programs). Bonds are just a way for the city to borrow money to pay for large projects like street improvements, police and fire stations, libraries, major park improvements, and similar infrastructure projects.
Like any debt, the city has to repay the loan over time. During the budget debate last fall, I expressed my concern that the city was proposing to borrow too much money, which would have result in paying millions more in debt payment the following year (compared to this year). The debt repayment comes out of the same pot of money that is used to pay for street maintenance, police, parks, libraries, rec centers, and other basic city services. If we have to pay more on debt repayment, and no additional tax dollars are coming into the city coffers, then we have to cut services. Having cut services to the bone this year, it was unpalatable to me to set ourselves up for even deeper service cuts next year, to the extent we could avoid it by borrowing less this year.
I had proposed borrowing less money that still would have allowed us to move forward on many bond projects, but would not have resulted in a larger debt repayment the following year. Only Councilmember Margolin supported my proposal. So last fall, I ended up voting against the bond sale because it was too large and would have required the city to spend more money on debt repayment next budget year — money we just don’t and won’t have.
The city manager proposed today that the council formally approve the sale of $330 million in bonds. I again expressed my concern that we not increase our debt repayment when we won’t have the money to pay for it next year. City Manager Mary Suhm said that she had heard my concerns and that staff and bond council had figured out a way to restructure the bonds so they will not increase our debt repayment next year; in fact, our “credit card bill” will be reduced by about $600,000. That may not sound like a great deal of savings, but considering that the previous proposal would have had us spending additional millions, I consider this a good solution. It will allow us to move forward on the bond projects as planned, while reducing our debt repayment next year. For this reason, I voted in favor of the bond sale.