Hot Potato

You’ve probably heard that political considerations caused the ballpark bonds to be issued later than expected, and the delay cost the City $22 million.

$22 million? Forget $22 million. The ballpark bonds have a bullet payment of $17 million due in 2023. Which means, unless we’ve got an extra $17 million lying around by then, we’ll have to refinance the ballpark. So that $22 million is likely to be $60 million by the time we pay it off. If we ever pay it off.

I reckon all the rest of the City’s bonds have similar payouts. That’s why it’s important to evaluate the City’s finances with the accrual system of accounting instead of the cash-basis system of accounting. Municipal governments aren’t like the federal government. The City can’t just print money. They have to milk it from the taxpayers.

See, we’re not broke as long as we can keep borrowing money. That’s likely why our former City Manager and former Chief Financial Officer didn’t think delaying the bond issue was a big deal. They weren’t looking at debt. They were looking at cash flow.

With political turnover, City Council can run up the bills today and let the next iteration of elected officials worry about paying them off. That’s the downside to term limits. Lame duck administrations can max out the city credit cards to benefit private interests and stick someone else with the bills.

If it’s not criminal, it’s grossly irresponsible.

Constantly refinancing our debt is like using one credit card to pay off another. Eventually the people who buy bonds are going to figure it out.

And suppose, in the interim, the economy hits another bump? It would only take a poorly timed hiccup to crash our house of cards.