The last time Angela Hunt voiced her concerns about about bond projects and the attendant jump in debt service, she gave us the by-now classic slogan: "We must do [X] to make Dallas a great city. If you oppose [X], you don't want Dallas to be a great city." (Now available on a coffee mug, no kidding.) Well, yesterday the council voted to sell up to $164.5 million in General Obligation Refunding and Improvement Bonds ($35 million of which will be used "to refund outstanding general obligation debt"). The city will also issue $350 million in walkin'-around commercial paper in October.
And, sure, the forthcoming budget process is going to be as painful as the last, with an expected budget shortfall somewhere between $50 and $110 million, give or take, unless sales tax revenues jump wildly and property values leap unexpectedly. But Mayor Tom Leppert likes the aggressive move, despite the additional $6.8 million in debt service: "We could look at the short-term issues and try to increase and protect our operating expenditures, or we could try to look at what we need to do to build the city long into the future." Hunt, of course, remains unconvinced: She was the only vote against the bond and commercial paper issuance, and on her blog explains why:
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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.