The Hogg talks bonds
Our final story on the 11 bond projects runs this Sunday. It's about the $5 million Parks and Recreation Bond.
David Hoggard is a Parks and Recreation Commission member, so I asked him a question that comes up frequently in relation to several of the bond items: Why can't these city departments pay for the projects out of their regular budget allotment?
His answer is long (you know the Hogg!), but worth reading:
"I've gone through a few budget cycles with the P&R department and have seen how tight their budget is. So I guess the "real world" answer to your question is the obvious one: They don't have that kind of cash laying around.
"When you hire a contractor to put a $100k addition on your house because of the growth of your family, you'd better have one of two things in place when they finish the contracted work: cash in the bank or a line of credit to draw upon. It can easily be argued that paying cash upon completion is the more fiscally responsible of the two options, but that would have required a multi-year savings plan to have previously been in place.
"If you had anticipated that you would be needing that 100k addition 10 years ago, then you should have been putting $10k aside during each of the 10 previous years. But the fact is, you didn't know your family would become THAT big SO fast, and even if you did have such a twinkling in your eye, your income over the past 10 years did not throw off enough to put the $10k away annually anyway.
"But now you find that your need for the addition is immediate, your annual income has grown, and you will soon be paying off the loan you took out to fix the kitchen five years ago, which will free some cash up to pay the new loan off without severely impacting your current budget.
"So it goes with the projects that are to be completed with the P&R bond. Sure, the projects CAN get done if the bond fails, but we will have to immediately start asking for that extra $10k in our annual budget until we can save enough to get them funded and started ... in, say, 10 years... at which time even more facilities will be needed ... which will require us to start saving for those now as well ... which will also require an increase in the P&R's annual funding.
"So, I guess the real question to the voters is this: Do we need additional P&R facilities right now and in the foreseeable future? If the answer is 'yes,' then we either have to start a savings plan tomorrow and defer the projects (such a savings plan may require a tax increase), or we can take out a low interest loan now and undertake the projects now to save on construction inflation (such a loan may require a tax increase also).
"If the answer is 'No, we don't need additional P&R facilities,' that is certainly a voter's right to hold that opinion - but they will be wrong."
Comments (3)
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Readers might be interested in seeing this video by David Hoggard on the parks & rec bonds.
Posted on October 12, 2006 9:45 PM
David gives an good analysis of the difference between an "operating budget" and a "capital budget." His comparison of a loan for home improvement and bonds for community improvement is correct.
The City operating budget is designed to cover on-going expenses such as salaries, supplies, equipment etc. The Council, appropriately, is always looking for ways to keep that budget as small as possible while still providing services. (For example, note this year there are only two leaf collection cycles versus the three or four in previous years. That is a trade off between taxes and services. These decisions are made all the time.)I would guess that if an extra $10 million was put in the budget to save for projects in the future, it would face great scrutiny and likely not survive more than one year or so.
The proposed bonds are all examples of projects that give life and momentum to our community. Each contributes and in total they will contribute to economic and community development. This is a time in our history to tell the outside world that, even as we are losing jobs, we are willing to invest for the future to make Greensboro a place where businesses should locate.
Posted on October 16, 2006 8:45 AM
That is a ridiculous analogy. There is a big difference between having to provide a home for your family and wanting to build them an indoor pool.
Just as with your home budget, a city budget should reflect income. You live within your budget and don't take undue risks that jeopardize your home/way of life. This City has a demonstrated ability to fail at all business ventures it enters into. The bonds in question are all a result of that failure and the failure to budget for the future.
I'm sure you want to be the only house on the street with an indoor pool, but I would rather everyone on the street have adequate services and infrastructure provided from a fair income system and balanced budget. Then, I want a pool too.
Posted on October 17, 2006 3:27 PM