The Chron’s Bradley Olson bats the topic around with opinions from various locals. Here’s a key point:
Although the mayor is right that the city has not borrowed to pay for operating expenses, Parker said, it has used debt to pay for obligations that in previous years would have been paid through the tax- and fee-supported general fund, the city’s main operating budget. In other words, the use of debt for certain expenses freed up money for the city to spend on operations.
The debt, much of it the result of borrowing to meet pension obligations, also is a primary reason the city has built up its reserves, the city controller said.
“Part of the reason we have healthy fund balances is that we borrowed the money instead of tapping the fund balance,” Parker said. “We used pension obligation bonds to meet current (pension) obligations.”
For some, the $49 million dip into the reserves is enough to declare the budget unbalanced.
“How do you justify expenditures being greater than revenue?” Councilwoman Holm asked. “How is that being fiscally responsible?”
For Lemer, the author of a 2004 ballot proposal to limit city spending, the $49 million question is moot. He argues that the city racked up a cumulative deficit of $1.5 billion from 2004 until 2008.
“That is absolutely frightening,” he said. According to his research, the main driver of that has been borrowing to keep up with costs for the city’s pension debt.
Imagine what your personal finances would look like if you handled your mortgage obligation the way Mayor White has handled the city’s pension obligations.
PREVIOUSLY: Lemer on the pension fund problems
