Hidden Letters to the Editor: Budget, Bonds, Deficit

Saturday’s Scottsdale Republic contained a number of interesting things you won’t be able to find in their online version at AZCentral.

These included another masterful opinion piece by Grant Martin on the city council’s bond vote last week; a pretty accurate “My Turn” from Councilman Bob Littlefield to counterbalance Martin; and a Beth Duckett story on the budget, which for some reason that escapes me was turned into a slideshow. Not with graphs and charts. With photographs. Hmmm.

First, the bond.

In case you don’t know, issuing bonds is like the city’s version of a credit card. At $1.3 BILLION, Scottsdale’s current debt exceeds the debt of our troubled neighbor “across town”: Glendale. We all know they are in deep trouble. Frightening thought, huh?

When we borrow, we have to pay back. With interest. Cities and finance people call that “debt service.” At our current level of debt, about 1/3 of our city tax revenue goes toward debt service. That’s $87 million out of about $225 million.

During last year’s mayoral campaign, Jim Lane never addressed this issue at all. Maybe he was too busy dancing around the fact that this year’s budget contains an $8 million deficit that he and his compatriots on the council “balanced” by transferring money from savings. Of course, he managed to spend a little time calling his critics on this issue (including yours truly) “goofy.”

However, I’m getting ahead of myself. Let me get back to the editorial on the bond.

Martin says,

Councilman Bob Littlefield got to the heart of this rift early on, opining there should be eight “must-have” line items on the November ballot, which voters could support individually.

Actually, citizen Mark Stuart first suggested this in public comment, followed by yours truly.

Martin continues:

It’s a logical suggestion, but it would also do away with 37 projects — or 82 percent — of the task force’s recommendations.

When the logical thing to do is to gut the task force’s proposals, made in what was an undoubtedly meticulous and comprehensive process, it casts doubt on the efficacy of the task force itself.

I don’t have any problem criticizing the task force (or the notion of the city council using them for cover), but I don’t think Grant actually read the recommendations or listened to the council discussion. It is pretty clear that even the task force agreed that only the eight items Littlefield discussed were essential to include on the bond. That was plain from the task force’s table of rankings.

What’s certain, however, is that in assembling their recommendations, the task force forgot what’s lamentably become the cardinal rule of affecting change in our city: Think small.

When it comes to government spending, we should all be so lucky.

Economic growth vs. real estate development.

I’ve posted this “My Turn” by Councilman Littlefield in its entirety as another article. Bob makes the point that there’s a big difference between economic growth in general and economically-burdensome real estate development.

As I said in my commentary on that article, I only disagree with Bob on one point: The economic downturn wasn’t the cause of shortages in funding our “unfunded infrastructure needs.” The cause was Mayor Jim Lane and the city council not compensating for the downturn by tightening up discretionary spending, much of which is in the form of subsidies to cronies and favored special interests…and it continues even today in the form of millions of dollars in subsidies for golf, for example.

The budget.

Highlights from Beth Duckett’s piece on the budget include:

As proposed now, the budget would tap into savings to cover these one-time costs:$3 million, to go toward capital projects for infrastructure improvements and upkeep.

$859,000 to catch up on maintenance postponed in the recession.

$500,000 to hold a Nov. 5 bond election.

$295,000 to replace equipment at public playgrounds and pools.

“Infrastructure improvements and upkeep,” shouldn’t be “one-time costs.” They should be budgeted recurring expenses.

On paper, the budget forecasts a $6.3 million shortfall in the 2013-14 general fund, which represents total revenues minus expenses.

By my calculations using the city treasurer’s numbers, that shortfall is likely to be closer to $11 million.

By June 30, the city expects to have $11 million in savings, called an “unreserved fund balance,” that could be used to cover one-time costs, offsetting the shortage.

Scottsdale also has reserves and a contingency set aside for emergencies.

Altogether, the amount is expected to tally about $40.5 million this summer.

Critics, however, have said the budget is not sustainable when expenditures continuously exceed revenues.

That’s not what “critics” say. That’s what every economics textbook says, not to mention common sense.

To improve sustainability, Worth said the city plans to invest in its employees and infrastructure, which could stave off major costs for recruitment and repairs down the line.

“Those are the kinds of things that make the budget itself more sustainable,” Worth said. “We can cut corners and make people do more with less. But you can only do that for so long and you start losing employees. The same with facilities.”

Budget sustainability is like pregnancy: You either are or you are not. As the quote from George Carlin reminds us of the word “unique,” modifiers to that word are redundant.

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