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Swearengin presents final budget with nod to "treacherous" early days

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Mayor Ashley Swearengin unveiled her proposed Fiscal Year 2016-17 budget Tuesday at Fresno City Hall.

The key points:

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“It’s my final budget and I wanted it to maintain the momentum we’ve worked hard to build,” Swearengin said. “This budget is structurally balanced and adds to our emergency reserve while increasing funding for police, fire, parks, code enforcement and street repair.

“The hard decisions of the last eight years are paying off, and the City of Fresno has emerged as financially stable and vibrant. We’ve got an exciting future head of us.”

City Manager Bruce Rudd said the proposed budget is “a strategic, fiscally responsible and sustainable approach to restoring essential city services. This budget provides the investment necessary to help us continue to make Fresno safer, cleaner and stronger.”

All City Hall reporters have one big question for a new budget: What’s the general fund number?

Near as I can tell, the general fund “appropriations” for 2016-17 are expected to be $293.2 million, a 5.1% increase from the current fiscal year.

But another page in the budget pegs next year’s general fund revenues at $316.4 million. A footnote adds that this figure incudes the emergency reserve and the public safety communications equipment reserve.

Then there’s page A-7: “Revenues Summary by Fund Classification.”

This is the page that predicts $316.4 million for the general fund. This is listed under “Governmental Activities.” Also listed under “Governmental Activities” are Trust ($134.2 million), Capital ($45.7 million) and Debt Service ($33.8 million).

Total expected revenues under Governmental Activities for 2016-17: $530.1 million.

The item that struck me on this page was Debt Service.

Ah – good ol’ debt, especially the general fund kind. It’s impossible to fully grasp the enormity of the Swearengin Era’s budget challenges without digging into debt service.

Let’s turn the clock back to late December 2008. The November general election was over. Swearengin had rallied from a so-so June primary effort to handily thump Council Member Henry T. Perea in the mayor’s race. She was busily preparing to take office in early January 2009.

In December 2008 I was an ex-City Hall reporter working in The Bee’s sports department. I had gotten on the wrong side of Bee management, something I seemed to do with regularity. I had worn out my welcome on the City Desk, but Sports Editor Robert Zizzo was kind enough to take me in.

I continued to watch City Hall from afar. So, a week or two before Swearengin took the oath of office for the first time, I wrote a long blog (posted on the Sports website) listing the 10 big financial time bombs about to land in the new mayor’s lap.

For some reason, the Big Ten hadn’t been a factor in the Swearengin-Perea campaign. But I had a strong sense most would explode on Swearengin’s watch.

Most did go “boom!”

There was the $5 million Granite Park bank loan guarantee, approved by the City Council four years earlier. A developer with big dreams and almost no development experience convinced a divided council and the Autry Administration to co-sign on a seven-figure loan – with next to no due diligence done by the city on the developer’s financial health.

The developer went belly up. Swearengin had to borrow money to pay off the loan.

There was the $15 million Fresno Metropolitan Museum loan guarantee, approved by the City Council in mid-2007. All of Fresno’s social and intellectual elites were neck-deep in this one. They loved The Met. They knew a huge expansion of The Met would turn Fresno into the cultural capital of everything between Los Angeles and San Francisco. The $15 million bank loan was just the first step 0n this march to greatness. But the loan had to be renewed. City Hall co-signed to grease the skids.

The Met collapsed. The elites ran for the exits. Swearengin had to borrow money to pay off the loan.

There was No Neighborhood Left Behind, approved by the City Council in 2004. I’ll take it slow as I explain this one to you newcomers. The council and Mayor Alan Autry saw that Fresno had a lot of infrastructure upgrades to do – curbs, gutters, repaving, pothole repairs, etc. But there wasn’t enough money to do everything in a hurry. Public Works did the best it could, using grants and scarce general fund dollars to chip away at the backlog year by year. But city leaders in 2004 got tired of waiting – Fresnans were in pain! City leaders decided they would borrow $30 or $40 million to do a bunch of work in a short time. Guess what? The construction part of this plan worked perfectly. Some people got new curbs and sidewalks. The only problem – City Hall had to pay millions in annual debt on the No Neighborhood Left Behind bonds. When the economy collapsed and city revenues dried up, City Hall had a choice of defaulting on the bonds and throwing city finances into the toilet for years or cutting back on public safety, parks and the very infrastructure projects that No Neighborhood Left Behind was supposed to fix in the first place.

Swearengin made sure No Neighborhood Left Behind bondholders got paid on time. We’re talking $3.5 million a year. The bonds won’t be repaid until 2023 – when the new mayor, should he be so lucky, will be late into his second term in office.

I went on and on in this vein in my December 2008 blog. Stadium bonds, public safety bonds, parks bonds, pension obligation bonds, parking garage bonds. I was supposed to be writing about Barry Bonds, and there I was writing about bonds graded by Moody’s.

Former City Manager Jeff Reid wrote me after I posted the blog. He said no one would read my piece because it was posted on a sports website. He said I should try to get my editors to publish it in The Bee’s print edition. An editor did drop by my desk. He wanted me to cut the list from 10 to five. He wanted me to summarize each of the five in a couple of sentences.

In other words, the bosses wanted something light and easy for the readers. The abbreviated story didn’t work. It never got published in the newspaper.

I think the bosses in their hear of hearts were convinced none of the bond bombs would go off.

I soon went back to City Hall and spent the next seven years writing about the damage done by those bond bombs to a half-million Fresnans.

So, Mayor Swearengin’s final proposed budget is here. The thing runs to 401 pages. Budget hearings begin early next month. CVObserver in the coming months will dig into all the nooks and crannies of this amazing document – public policy for the next 12 months.

But I sure hope one of the council members at the upcoming budget hearings calls attention to page A-16. That’s where you’ll find the list of general fund debt obligations and what it costs the general fund in annual payments.

In a way, page A-16 is lasting testimony to Ashley Swearengin’s excellence as mayor. And I say this as someone she tried to get fired last year.

“We have made it through treacherous days,” Swearengin said Tuesday at City Hall. “We have learned from past mistakes.”

I’ll buy your first sentence, Mayor. But not the second.

George Hostetter
George Hostetter is The Sun’s Fresno Civic contributor – covering the City of Fresno, County of Fresno, and Fresno Council of Governments.

1 Comment

  1. George, I love what you are writing. I’m sorry that the Bee treated you shabbily. I’m glad CV Ovserver exists, at least in Facebook land.

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