[Mpls] Tracking city debt

[David Brauer]

Several days ago, I made a point about the current crew at City Hall=20
reducing city debt despite being handed a big bag of debt racked up by=20=

their predecessors in "good times."

A couple of thoughtful list members asked me offlist for specific=20
figures. Fair request.

The data is from the city's Comprehensive Annual Financial Reports.=20
It's a bit wonky, but worth plowing through to understand the major=20
fiscal constraints governing political promises and policy.

The first figures are for city general obligation debt (the big=20
measure). The figures below do not include the new Central Library=20
(it's a voter-approved measure that didn't kick in until 2002, and it=20
wouldn't be fair to include it when comparing the current group to the=20=

past group). I also backed out pension debt =97 also new since 2002,=20
because of a generation of underfunding and a bad stock market that is=20=

also not the result of current policy.

Here's the remaining debt arc, in millions.

1996: $767
1997: $804
1998: $858
1999: $969
2000: $1,164
2001: $1,174.2 (peak)
2002: $1,073.9
2003: $1,091.5
2004: $1,087.7

A quick note: the Sayles Belton/Cherryhomes group approved the 2002=20
budget  =97 in December '01, just before leaving office, so they didn't=20=

have to live under it. The current Council/Mayor cut the 2002 budget=20
more after various financial hits.

As you can see, this debt ballooned in the SSB/CH years. Even if you=20
don't credit the current group with 2002's drop, city debt has stayed=20
flat despite the 2002-04 economic slump and state aid cuts.

The second figures represent the city's Internal Services fund deficit=20=

=97 basically, approved department spending with no revenues to pay for=20=

it. It's "charging up the credit card" for operating expenses =97 a=20
really bad way to govern. Here's that arc (figures represent the=20
aggregate cash position of the city's 6 internal funds):

1996: $1.6 million in the hole
1997: $13.2 million in the black
1998: $5.3 million in the hole
1999: $15.6 million in the hole (note a $29 million drop in two years)
2000: $31.6 million in the hole (another $16 million of red ink)
2001: $33.9 million in the hole (peak debt)
2002: $$27.3 million in the hole
2003: $19.3 million in the hole
2004: $15.8 million in the hole (unaudited)

Again, the SSB/Cherryhomes years saw $33.9 million placed on the credit=20=

card. Despite state-aid cuts, etc. , the current crew reduced that=20
figure by $12 million to $18 million, depending on who you credit 2002=20=

to.

It's easy to criticize the current regime for not spending enough on=20
police, fire and public works. But you have to acknowledge their hands=20=

were greatly tied by the ballooning debt bequeathed to them.

I'm not saying it's wrong to demand more be spent on vital public=20
services in 2005. However, it is wrong to give opponents a "blank=20
check" on promises without asking how they can pull off the necessary=20
spending given the financial constraints.

One way is to raise property taxes above the 8 percent overall annual=20
hike that's now city policy =97 tough, since homeowners are seeing =
bigger=20
hikes thanks to the state's shifting rates away from businesses. You=20
can also cut other spending  =97 tough since police, fire and public=20
works are most of city spending. You can promise more revenues: more=20
state aid  =97 but who wants to count on that? =97 or pension accounting=20=

changes that don't produce enough annual cash to offset most cuts...=20
and do nothing to fill underfunding, other than give the stock market=20
more time... and who wants to count on that?

The final option: run up the credit card again.

And that's what my tale is designed to avoid, since credit-card=20
spending is the easiest one to get away with in the short term =97=20
precisely because tracking it requires lengthy explanations like the=20
one above.

I think being responsible means paying our civic bills =97 at the state=20=

level AND at the city level. So if we need more of something =97 =
employee=20
wages, neighborhood-controlled spending, roads, whatever =97 the person=20=

who wants our vote must explain how it's paid for. I hope you demand=20
it, and I hope this helps inform the discussion.

David Brauer
Kingfield