elpasospeak

The other day we learned about a new city fiction to move part of the debt relating to the new rapid transportation system over to Sun Metro where it would be “self supporting”.

Let’s look.

The Sun Metro site tells us that their fares go as high as $1.50 for regular passengers, fall to $1.00 for military, retired military, spouses of either military group, students, and children aged 6 to 18.  Children 5 and under ride for free and senior citizens (65 and older) pay 30 cents.  Transfers are free to all passengers.

The numbers from the 2012 national transit database show Sun Metro’s costs to be $2.82 per un-linked passenger trip.  They use un-linked to mean every time someone boards a bus — getting on one bus and subsequently transferring to another is two un-linked trips.

Make it up in volume

Most private citizens and I venture to guess some governmental accountants can see that we lose money on each trip.

In fact the 2012 report shows that fare revenues accounted for 17% of what they spent for operating costs that year.  Local funds paid for 63% and federal assistance for 20%.

Capital expenses saw no contribution from fare revenues and 44% from local funds and 56% in federal assistance.

In fact the reports shows that local funds amounted to over $40 million dollars for that one year.

The idea that Sun Metro can “self support” debt is simply fictional.

We deserve better

Brutus

The Tuesday, July 22, 2014 city council agenda has three items placed on it by our chief financial officer.

Our former chief financial officer.    Her last day was to be Thursday, July 17.

Agenda items have a “Department Head’s Summary” form and other material attached to them as they are submitted to be placed on the agenda if the rules are followed.  These three items list the former chief financial officer as the contact person.

Why would she do this?  Many of us would leave this to the new person in charge if we knew that we would no longer be in charge when council considers the item.  Is she trying to tidy up some loose ends in her reign of financial misdirection?

The three items don’t make sense to me.

Item 7.1 on the regular agenda is the first.  It proposes authorizing $72 million in certificates of obligation for the city to “fund and reimburse itself for ongoing capital project”.  Once again she wants us to go into debt.  These proposed bonds will carry a maximum interest rate of 4.85% and will mature 26 years from now in December of 2040.  We would pay $130 million back with $56 million of it being interest.  Bond counsel and underwriter fees will cost extra.

As we have seen before, the backup material does not indicate which projects have already been paid for and which ones are yet to be done.  What we do know is that some of them have already been paid for.  Why spend almost twice as much to finance something that we already own?  Is it because the money that was used was really for other city commitments and now the council really has no choice?

Item 7.2 proposes $59 million in general obligation refunding bonds.  We already issued bonds in 2005 and 2006, with the 2005 bonds being for the Plaza Theatre.  Now they want to refinance the debt at 4.15%, presumably a lower rate of interest.  The catch?  The new bonds will mature December 31, 2031, at least 26 years from now.  Bond counsel and the underwriters will get paid again.

The third item is number 7.3 on the regular agenda.  On the face of it this looked like a good move.  She wants to take $5.3 million of our new Mesa street mess created by the new rapid transit system and move the obligation to Sun Metro.  This would remove the money from “tax-supported debt” and move it “to Sun Metro self-supporting debt”  Once again bond counsel and the underwriters will be paid extra.

Baloney!

Sun Metro is not self-supporting.  Millions of dollars of our local tax money are transferred to Sun Metro every year.  Every new dollar that they have to spend will have to be subsidized by our tax money.

These items are designed to free up operating money so that the city can spend more.

The net effect of her signatures?  The new people don’t have to have their names associated with this.

We deserve better

Brutus