By William A. Goff, Alexandria (File photo)
To the editor:
The topic of city fiscal mismanagement has been a familiar theme of citizen rhetoric for the past year. With the city elections less than three months away, City Councilor Justin Wilson finally has attempted to address this issue and refute the idea that the city is in harm’s way and infer that the story will end happily ever after because of our triple-A bond rating and our 1.31 percent local debt limit as per the recent Comprehensive Annual Financial Report. Mr. Wilson, I wish this was true, but it’s just not that simple.
A bond rating is a forward assertion of a municipality’s ability to retire debt based upon the past history of debt payment in an effort to predict timely future payment. Think of it as a credit score for a city or municipality — a type of credit worthiness. There is no mystery here: we have paid our debts on a timely basis, and we have the flexibility and ability to raise taxes to pay off debt based upon the affluence of our populace. So we earned this rating, but it is based on past history; our current problem is the future.
Councilor Wilson, you have been a regular at the city’s facilities meetings, especially during the recent budget process. You know that since 1987, the city has operated under specific established debt related financial policies. These financial policies were derived from the analysis of other successful jurisdictions, and in 1998, these policies were adopted as part of the budget process and were reaffirmed by city council in 1999 and in 2008 — by Wilson himself in 2008.
These debt policies have been utilized by city council to ensure the long-term affordability and sustainability of the capital improvement plan. It is without question that the adherence to these city ratios has contributed to the city’s financial success, growth and triple-A bond rating up until now. However, citizens of Alexandria, things have changed, and despite Wilson’s verbiage, he, you and I know that things are different and we are looking over a financial precipice.
There are three ratios to which the city has adhered. A: Debt as a percentage of personal income, which measures citizens’ ability to finance tax-supported debt. B: Debt as a percentage of fair market real property value, which is an important indicator in the city’s ability to repay debt as property tax revenue is the main source of funds. C: Finally, debt service as a percentage of general government expenditures, which measures the city’s ability to repay debt without hampering other city services.
All three of these ratios are currently above city target levels and bordering on absolute limit levels. With the future expenditures on school infrastructure and Metro financing added, these ratios would be completely broken.
In 2004, it cost $20 million to finance the city debt, but in the 2016 budget it will cost $63 million to finance the debt, an increase of 215 percent overall or 16.5 percent per year. The debt service as a percentage of the general fund has increased from 7.1 percent in 2011 to 9.8 percent in 2016. The conclusion in 2013 was that the city has a debt issue. The budget and fiscal affairs advisory committee issued a warning stating, “The trend is evident regardless of whether [the] Potomac Yard Metro [station] is included in the calculation, meaning that the debt ratios are worsening.”
Nothing has changed. City Manager Mark Jinks issued a statement to the fact that the real issue with debt isn’t the amount of debt; it’s the fiscal impact of the debt service. The conclusion of this facility budget process of 2015 was “within the limitations of the city council’s existing debt policy guidelines, there currently is not sufficient funding available for the 20-year schools program and changes.” Translation: Based upon what has previously worked, the current state of our borrowing needs is out of balance and we may have to change the ratios because they are no longer relevant — spending is out of control.
So, Councilor Wilson, those are the numbers, all authentic and well documented. Let’s be clear: There is no question that we do have a debt problem in Alexandria. The only remaining question is, why are you unwilling to admit it or address it? It’s too late for excuses; the Republican candidates are already addressing the budget issue.