The Morning Report
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Tuesday, Jan. 6, 2009 | Make no mistake about it: Mayor Jerry Sanders’ plan to sell $108 million in revenue bonds under a lease-leaseback arrangement will commit the city to millions of dollars in new spending (on debt service) each year for the next 20 to 30 years without creating any new revenue to pay for it. Given San Diego’s well-known existing “structural deficit,” this is something we can ill afford.
As the Los Angeles Times article you cite in your story makes clear, lease-leaseback — and revenue bonds more generally — make sense only when one foresees new non-property tax revenue to become available in the future. Of course, as we found out with the fictional TOT estimates from the government Office for Making Up Data used to justify the Petco Park bonds, finding new revenue is a Herculean task.
San Diego does need to address its deferred maintenance problem. But the right solution is general obligation bonds, not simply because they require a vote of the people, but because they come with increased property tax revenue that will be used to service them.
City Chief Financial Officer Jay Goldstone acknowledges as much when he says: “Typically, the only time I’ve experienced doing a (general obligation) bond is asking voters if they will increase their tax burden to cover the debt service. We’re not asking for added revenues from the taxpayer to pay this.”
His last comment should make us all wonder how the cities can afford new long-term liabilities without new long-term revenues to pay for them.