Local Pundits Not Outraged at Raising City's Debt or Taxing Senior Citizens Today Yet Totally Outraged Yesterday

Remember all the outrage at the city’s growing debt and constant outrage at any tax levy for its ostensible impact on seniors?
Recall that if you ever want any improvement in quality of life — education, green space, livability — you simply cannot have it with the stated reason by our local pundits and political class that ‘how dare you raise taxes on seniors?” couple with the refrain that the “city is bankrupt!”.
So it’s interesting to see how little outrage at the proposed tax hike from allowing veteran’s exemptions on property taxes — an effective tax hike for taxpayers that definitely will impact seniors. (Board discusses tax exemption for veterans)
And then the total silence on adding a cool $5 million to the city’s debt after all the recent campaigning and demagoguery on the city’s dire financials.  (City to borrow $5 million for sewer system upgrades)
Funny how that works.

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4 Responses

  1. Perplexing at best.
    I find the complete lack of critical thinking or a comprehensively planned and articulated approach to any given situation on the part of the mayor and council exceedingly disturbing.

  2. Dan says:

    I agree with some of what you are saying, however, consider the following concerning borrowing $5 million. 1. Millions of gallons of raw sewage were discharged into the river a couple of years ago. 2. As a result, the city paid a fine and signed a consent order to correct problems with the sewage systems including the pumps that failed. 3. A rare opportunity comes along to borrow money at 0% interest. 4. 0% is the nominal rate. If you factor in inflation, the city is actually borrowing the money at a -1.4% rate. That means the city will be paying the loan back with cheaper dollars, therefore making money on the loan. This will offset any administrative or other fees. 5. There is also the possibility that some grants may be obtained to pay off part of the loan.
    Anytime you can borrow money at 0% (actually -1.4%) to pay for something that you are required to have done, wouldn’t it make sense to do so, unless you have the cash on hand? Even if you had the cash on hand, it still might be wise to borrow. I could have paid cash for my last car, but Toyota gave me a 0% loan for 5 years. I am paying Toyota back with cheaper dollars due to inflation. At the same time, the cash that I could have used to buy the car outright is earning me money.

    • flippinamsterdam says:

      I think the need for bonding is clear and justified; my point was to call out the hypocrisy of the demagogues on city finances –the city has too much debt, the city is bankrupt, yadda yadda– but now remain totally mum on this. They can’t have it both ways although it appears that they are succeeding in that.
      I have zero argument with the bond but even at a 0% rate and partial grant subsidies , it will fall to city taxpayers to pay it off so it is effectively a tax increase. I disagree with this statement “That means the city will be paying the loan back with cheaper dollars, therefore making money on the loan.” — that cannot be true as the city will still need to make the bondholders whole by paying the principal amount back albeit at a lower rate but still requires hard dollar outlays by city taxpayers.
      My larger point is that the city seems to find money to do stuff when forced into it yet never acts proactively to make a case for investing in projects with a positive return. As a case in point, people howl at the notion of millions of dollars for a rec center as wholly implausible yet we seemingly can come up with $5 million without too much rancor. The difference seems to be that the city will always spend money to tear something down or fix something but will never spend money on anything to drive growth and progress. And thus we have a negative cycle of higher debt, lower investment and higher taxes.
      As a final soapbox comment, let’s see how much this council will spend on demolition versus spending to drive development. I predict it will be $1.5 million to zero , respectively, continuing the long tradition of not investing in the community and driving tax rates higher given the lack of investment.

  3. Dan says:

    Making money and making a profit are two different things. Obviously, the principal has to be paid back, so you are not going to make a profit on a 0% interest loan, but when you factor in inflation (which you must do when determining what interest you are really paying on a loan or what interest you are really earning on an investment) you will make money that will offset some of the cost of the loan. If you borrow $5 million at 0% interest and pay it back over 30 years and if inflation were to remain at a constant 1.4%, the $5 million you pay back will be worth only $3.88 million, in effect saving you over $1 million. If inflation were to go up, you would save even more. Yes taxes will go up, but you will have made about the best of a bad situation as you can. It is hard for people to complain about bonding that the city was forced by both necessity and the State to do. Of course, the city, any city, is going to find the money to do what they have to do, just as you and I would in our personal lives. I do agree with you about demolition. I would love to see a mayor brag about how many buildings they rehabbed, put back on the market, etc. rather than how many they demolished. I would add, however, that repairing infrastructure is an investment in the future, although not as visible and sexy as a new building on the Chalmers site would be.

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