City Hall Hustle: How Many Bonds to a Season?
Doubts surfacing about when to dun the voters
This semiapocryphal instruction, usually credited to the late Illinois Sen. Everett Dirksen, summarizes the surreality of government spending, where the amounts are often as large as they are incomprehensible.
Swapping the billions for millions, City Council is pondering similar arithmetic: specifically, whether by committing to a targeted transportation bond package this year – then a rail bond election in 2011 – followed by a much larger general bond election in 2013 – they'll be facing a real money crunch of their own.
The first financial rumblings surfaced at council's Audit and Finance Committee in late April. Looking at a three-year window starting in 2012 – the first year any debt could be issued for a bond election this year – and stretching to 2014, the city had a total bonding capacity of $170 million, down from an estimated $200 million, due to a projected 5% drop in assessed home values. (This conservative estimate was challenged a few days later by a rosier assessment for Austin Independent School District from the Travis Central Appraisal District, but the numbers are still very much in flux, especially considering an anticipated increase in property tax protests.) That shrunk Mayor Lee Leffingwell's proposed November transportation bond vote from $100 million to $85 million (i.e., half the bond capacity – as we noted, a number that will remain in flux until the tax roll is certified in late summer). But beyond the raw numbers, the committee began to wonder whether the city could support three ambitious bond elections in four years. "Because these decisions have very large financial impacts for the city ... the question is, 'Should we do it, when should we do it, and how should we do it?'" said committee Chair Sheryl Cole.
To get some answers, Cole is sponsoring an item asking the city manager to bring council options for achieving the transportation bond election's goals while preserving capacity for a larger bond election in 2013.
"All the council members want to address the city's critical needs," Cole tells the Hustle. "Transportation is a high priority item right now. But at the same time, we don't want to look at that in a vacuum and not have any idea about the impact on other needs, such as parks, libraries, and affordable housing. ... Essentially what this resolution does is say: 'This is our goal, a wish list. Give us some options. Tell us how to get there.'" Options could include a smaller bond package in 2010 with bundled transportation items in the expected 2011 rail vote or exploring other payment options for transportation improvements, like issuing certificates of obligation.
Cole is concerned that the procession of tax-raising bond elections in a bum economy could become politically toxic – especially against an omnibus bond election in 2013, expected to be in the $600 million range. "Probably even more dangerous than signing off on the money and not being clear about the tax increase is setting ourselves up to lose an election. The last thing I want to happen is to lose the big one."
Bill Spelman, a fellow Audit and Finance member, has his own financial concerns, noting while "there's very little uncertainty for 2010, there's some uncertainty for 2011, and once you get out to 2013, there's a lot of things that can happen," like changes to assessed values or the city's interest rates. Spelman also questions the wisdom of putting the bond election on the November ballot when the gubernatorial race will draw the lion's share of voters' attention. Like Cole, he's not saying the election should be called off, but he advocates caution. "How much can we actually build in a year?" he asks. "If we can build $30 million [worth of projects] in a year – and we're a little worried about going back to the voters over and over and over again – wouldn't it be safer for us to just build $30 million worth of stuff, because we're anticipating a 2011 ballot anyway?"
There are other voices from off the dais also advocating caution. Addressing the Audit and Finance Committee, Susan Moffat, Liveable City board vice chair (and wife of Chronicle Publisher Nick Barbaro) said, "There hasn't been sufficient time in the current process to really have adequate participation in setting the scope of this bond election," and that the process could be "out of sync" with the city's ongoing comprehensive planning and strategic mobility efforts. "Get our plans nailed down, and then talk about how we're going to make that happen, instead of throwing money in ahead of our planning efforts." The concerns cited by Moffat have some in the local political sphere saying that the November election – a campaign promise by candidate Leffingwell – is being rushed.
"I think different council members feel different ways," Cole says. "My problem is that it was definitely being rushed in saying that we were going out in 2010, 2011, and 2012. That was a rush."
A bond election here, a bond election there ....
City Council meets today, Thursday, May 13, at 10am. For more on the council agenda, see the Daily Hustle at auschron.com/tdh.