Two events at City Hall earlier this month sent a familiar message to Fresno taxpayers: Politicians find it fun and easy to spend your money.
I’m talking about the City Council meeting on April 6.
One of the events was the refinancing of a bunch of long-term bonds.
We already know what happened over the last 15 to 20 years. Our elected leaders fell in love with debt. The Fresno Metropolitan Museum can’t pay its bills? City Hall borrows. Granite Park can’t pay its bills? City Hall borrows. Pay-as-you-go is too slow for new sidewalks? City Hall borrows. Social justice warriors bemoan our parks system? City Hall borrows. The Convention Center can’t compete with new entertainment options? City Hall borrows. Downtown needs a new parking garage to compete with all the empty parking lots? City Hall borrows.
The general fund picked up most of the tab for these and several other high-profile debt deals. Then the Great Recession hit. Basic city services were slaughtered. Bankruptcy loomed. But the bondholders got paid on time.
Fresno is in much better financial shape these days. The administration of Mayor Ashley Swearengin and a City Council led by Lee Brand (the current mayor) deserve some of the credit. So do the half-million Fresnans who voluntarily cinched up their collective belt even as they grumbled about the fecklessness of politicians long gone from the scene.
Controller Mike Lima went to the City Council on April 6 with good news. Fresno’s improved credit score with Wall Street means the time is ripe for refinancing all that debt.
The council on a 6-0 vote (Steve Brandau was absent) gave Lima the green light to proceed.
The life of the current bonds will not be extended.
Anyone who has refinanced a home mortgage knows what that means. You pay 10 years on a 30-year mortgage, then refinance to get a better interest rate but end up with a brand new 30-year mortgage. If you stay in the house, you end up making 40 years of mortgage payments.
That won’t happen with Lima’s refinancing deal. Needless to say, the council was quite pleased to hear that.
The lower interest rate means big savings – a total of more than $32 million over the next 22 years. About 75% of that $32 million in savings will impact the general fund. The general fund, as we all know, does miraculous things for public safety, parks and infrastructure.
“I think this (the refinancing deal) is the biggest news in Fresno today,” Council Member Oliver Baines said. “It won’t be on the front page, but it should be.”
Said City Manager Bruce Rudd: “These kind of bond transactions do not happen overnight. This is indicative of a lot of hard work by a lot of people.”
An interesting aspect of the refinancing deal is the payout schedule for all that savings. It’s front-loaded. For example, the expected savings in the 2031 fiscal year is slightly under $1.1 million. The expected savings for the 2018 fiscal year (which begins in about 10 weeks) is $5.7 million.
Seventy-five percent of $5.7 million is about $4.3 million. By my calculation, that’s the approximate boost to the next year’s general fund thanks to the Lima deal.
We’re also only about a month-and-a-half from the start of budget hearings.
Maybe that’s why Rudd at the April 6 council meeting added: “Our financial stability and the improvement in our financial situation led to this change. Which, again, is why it’s so important for us to stay the course we’re on.”
What course is that? Rudd didn’t feel the need to elaborate. I do so for him – fiscal sobriety.
I now bring to Fresno taxpayers the second noteworthy event at the April 6 council meeting.
Fresno has a volunteer youth commission that’s just about a year old. Three of the commissioners delivered to the council a brief update on the commission’s activities. In a nutshell, the commissioners are busy learning how municipal government works.
It turns out the commissioners are fast learners. What makes municipal government tick? Power and money, of course.
The commission in its report to the council made this proposal: “We would like the city of Fresno to create a Local Government Internship program to provide high school, college, or university students with the opportunity to gain both academic and practical experience working in local government. Internships should be paid and designed to provide participants the opportunity to apply academic skills to various real world assignments while under the employ of the City. Interns will have the opportunity to learn about the City of Fresno and the exceptional services provided to the community. We would like to ask the city of Fresno to set aside a minimum of $100,000 to help fund this program.”
I love the commission’s use of “minimum.”
Near as I could tell on April 6, the council is thoroughly smitten with the Youth Commission.
Mr. and Mrs. Fresno – your $5.7 million from the Lima deal is toast.