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Tuesday, June 3, 2014

20140601 - Monday Morning Meeting with the Mayor

The following is the interview of Mayor Rudy Wright on 1290 WHKYam Radio's First talk program with Hal Row.

WHKY does not archive these programs and make them available to the public, so I am putting this important public interview up under Fair Use guidelines.

The Mayor talks about the proposed budget for 2014-15 and the upcoming referendum. He talks about the proposed 2¢ tax rate increase and possibly making the 1¢ tax rate increase designated for road paving a part of the upcoming bond referendum. He says we should take our chances on the 1¢ tax rate increase associated with operational costs (he says revenue uncertainties). In summary, he says he does not support a tax increase this year.

He says to leave it all up to the voters in the Bond Referendum and next year "we" will decide whether we need the money for paving and revenue uncertainty. The Mayor says that they have $25 million of the bond devoted to transportation and $15 million devoted to the Business Park and other tangible economic development.  He says that the there are people in favor of doing this now (as I told you). The Mayor associates the tax rates of 1¢ for paving and 1¢ revenue uncertainties and 4¢ for general improvements (Manager Berry's numbers from last year). The Mayor says that this would aggravate the voters. The Council IS going to make this happen "as much as possible" to the greatest extent possible either through the bond referendum or other revenue sources...  most of the council is in favor of doing this up front.

Then in the next segment the Mayor starts talking about 8¢ associated with the $40 million Bond Referendum (that goes right to the heart of the numbers I discussed with you two weeks ago = 8¢ for Inspiring Spaces + 1¢ for paving + 1¢ for operational costs = 10¢). 

Listen and fill free to comment.

Hound Notes: The Mayor is obviously a government guy. I've read and heard these people talking about buckets. Let's talk about double dipping or double counting. There is one freaking bucket and that is all of the revenue taken in by Hickory Inc. It doesn't matter how you divide it up or dole it out, at the end of the day it is the total amount of revenue under Hickory Inc.'s control. You take out a $40 million loan, then you have $40 million to spend as you see fit today, but that $40 million comes out of the capacity of future budgets. Hickory can't run at a deficit like the Federal Government. At the end of each year Hickory Inc. has to reconcile its books.

They can talk all day long about the Bond money. It cannot be separated out. At the end of the day you are borrowing that money against future revenues. So when it's time to pay off those bonds, you will have to either cut expenses from the budget or you will have to raise revenues through some sort of taxing mechanism in order to pay back the borrowed money. It isn't "raise property taxes" OR sell bonds. It is raise property taxes TO pay back the bond money. The Bond money isn't some kind of magic source of money.

It is ridiculous to talk about the paving money being part of the bond referendum. That additional money is needed from here on out. The projects as defined by and associated with this referendum are finite and will eventually end. We will always have to have roads paved and maintained in this community. Also, the Mayor can talk about our roads not being worse than other communities, that isn't why people are upset. People are looking at the roads now compared to what they were here 10 or 20+ years ago and saying they are awful. The cost of materials (petroleum) has risen and it is obvious that Hickory Inc. has been forced to cut corners here.

So, what it all comes down to is 1) is investing millions in these projects worth it,  2) what are the tangible benefits, 3) do we have the right people making the decisions about the priorities, and/or 4) are there mechanisms in place to assure accountability in association with this spending to ensure that this doesn't turn into a debacle like we saw with "the Sails" project.

Each of these projects need to be cut up into small definable, self contained segments. That way if the Council, now or later, finds the community in a bind due to these economically uncertain times that we live in, then they can pull back without these projects becoming an eyesore of unfinished business. Interest rates may be historically low today, but nothing says that they will be five or seven years from now. The reason I bring this up is because the $40 million will not be procured all at once, as City Manager Berry has stated in other venues, it will be procured in multiple tranches through the issuance of the authorized bonds over the next 5 to 7 years.

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