While council fiddles, B.I. burns
September 5, 2008 · Updated 5:21 PM
(On Aug. 27) the mayor and her City Council came together and plunged the city $1.7 million further into debt. Prior to the council’s vote, many members of the public, including several financial experts, urged the city to reduce its expenses rather than issue more debt. The council ignored the community’s concerns and immediately voted to increase the amount of debt requested by the mayor. After months of divided votes on budget issues, the council was united in its thirst for more money no matter what the cost.
Debbie Vancil made the motion to increase the debt from $1.45 million to $1.7 million. She did this so that she could add her favored project to the debt list. Bill Knobloch initially spoke out against more debt, but then turned around and voted for it anyway. Kim Brackett said the council was “in a pickle” and then she voted for more debt. Chris Snow said it would be irresponsible to cut expenses further. Then he voted for more debt. Hillary Franz and Barry Peters said that the decision to issue new debt had already been made in their committees, so the public’s expressed concerns were moot. Then they voted for more debt. Kjell Stoknes said he wanted to approve the bonds, but he didn’t like the project that Vancil added to the list, so he voted no.
So why should we care if the city chooses to go further into debt?
First, none of the 13 projects on the list are appropriate for long-term debt financing. The city is using debt to fund small maintenance, repair and improvement projects. This would be like taking out a second mortgage on your home in order to pay the plumber to fix a leaky faucet. Councilmanic debt is designed to pay for the creation or acquisition of significant long-term assets. It should not be used to fill gaps in the operations budget.
Second, all of the projects on the debt list are discretionary and are not essential to the core responsibilities of the city. Each of these projects could be eliminated or delayed without any adverse impacts on the community.
Third, the city has cash sitting in the contingency fund that could be used to pay for several projects on the list thereby eliminating the need for more debt.
Fourth, the city will pay over $50,000 in fees just to issue the bonds. That money could fund three projects on the list. The city will be obligated to pay $140,000 a year for the next 20 years to service the debt. The interest payments will increase the final costs of each project by 60 percent.
Fifth, half of the projects on the debt list were actually fully funded back in 2007 with cash. The city has already contracted for the work, but the projects have yet to be completed. This year the city decided to steal the cash that was allocated for these projects and use the money to fill holes in the operating budget. Now the contracts must be paid, but the city has already spent the money. The city is playing a financial shell game. No one knows where the money is or where the money goes. The city is using debt to cover up its own mismanagement and inefficiency and to pay for operating expenses that are out of control.
There is no question that the city has run out of money. So what are the alternatives to issuing more debt?
Bainbridge Island could do what every other city and county in this state is doing right now – cutting operating expenses. Since staffing costs make up the majority of operating expenses, most jurisdictions are taking actions to reduce staffing levels. Bainbridge Island has made some cost reductions this year, but it is not enough and it stubbornly refuses to consider staffing reductions. Council members say they are tired of cutting costs and they want to start spending money on goodies for the community. Unfortunately there is no money available to pay for the perks that make politicians popular.
The public told the City Council to take a fiscally responsible path and cut expenses. The council decided to do the opposite, increasing expenses and forcing the city into debt. The council has mortgaged our future to pay for their mistakes. It is unlikely that our elected officials and management team will be able to keep the city solvent for much longer. Taxpayers will be paying for the costs of their financial mismanagement for many years to come.
Bob Scales is a former member of the Bainbridge Island City Council.