Tacoma City Council Meeting - August 7, 2012

8 comments

• F fred davie August 9, 2012

  We have a lot of council meetings that are notable for their brevity. When are we going to get a council meeting that’s notable for finally addressing the city budget deficit?

• D David Boe August 10, 2012

  Fred, are you talking 2011-2012 budget or 2013-2014 budget? The City Manager has noted in mutiple public meetings since June that the City WILL have a balance budget for the current biennium and thus has Council, and the general public, in outreach forums the past 6-weeks to determine priorities for the 2013-2014 budget – which he will be presenting to the Council for review in October. Did you attend any of the 10 budget forums that were held?

• F fred davie August 11, 2012

  David, thanks for the response. In all fairness the city was informed of the budget problem last fall and Broadnax has been on the job for about 6 months.

  This budget problem should have been addressed a long time ago. The bond rating services have downgraded Tacoma’s bonds as a result of the ongoing deficit. The reason for the downgrade was specifically identified as Tacoma’s prolonged inability to get it’s budget under control. There’s nothing wrong with workshops or long periods of evaluation per se, but this problem needs serious immediate attention IMO. It’s corrosive to the operation of the city.

  No, I didn’t attend the budget workshops. But the council and manager should not limit their review to information uncovered in the workshops. They should be reading all the local blogs for further public input. The blogs are full of good input. Take a look at the Tribnet, feedtacoma, as well as exit133.

• D David Boe August 12, 2012

  Fred, we did indeed deal with the budget crisis when it appeared last November – including revising the revenue projects to the most conservative (not recommended by staff), working through cost reductions including a phase of lay-offs/retirements, passed new revenue measures (yes I mean new taxes), non-represented staff took a pay cut, many of the unions stepped-up for no pay increases in 11+12, and the reassignment of staff off the general fund where there was a nexus for the move. Because of the early action, the time over ’12 has helped the two-year budget cycle along with now increased revenue for the 2nd quarter (beyond the convervative council projections) that when combined with additional cost savings is about a $3m delta in the city’s favor.
  Now, the downgrage of the bonds were specific bonds related to the Convention Center – not the entire city’s portfolio – and given the impression of under-performance of the center I guess can see why. I thnk the city has in the past not kept the bond rating companies up-to-date on what/how we are doing financially and it is an issue we can work on.
  As for reading the bloggers, I must say that most of the comments are incredibly cynical and most seemed to be offerered with a mean spirit – thus not conducive to a true discussion of the issues at hand (though if they are only getting their information from the media they are posting on – it might explain why so many present themselves in not the most informed light).
  Too bad you could not make one of the 10 budget forums – and hope you attend some of the upcoming presentations of the 13-14 budget this fall.

• F fred davie August 13, 2012

  David, I don’t want to sound cynical… but here’s a quote from a local paper dated just one month ago. It doesn’t say the Fitch lowered bond ratings were a result of poor performance of the convention center. It says the lowered bond ratings were are result of limited progress in addressing the general fund deficit.

  “The press release from global ratings agency Fitch cited the city’s limited progress in addressing a deficit in its general fund, adding the firm was concerned that actions needed to solve the problem could require “politically difficult service reductions.”

  Isn’t it possible that this deficit business could have been handled more aggressively at the council level last year and minimized the collateral damage to our bond ratings?

• D David Boe August 14, 2012

  Fred, the bonds that were downgraded were those for the Convention Center – which if the Convention Center does not generate enough revenue to cover the repayment of the bonds, then the General Fund is tapped to cover the payment – and it is the General Fund that currently has the budget shortfall (not the entire city budget – just this bucket within it). As I noted, the city needs to do a better job of presenting the budget measures that have been under taken for this current budget and more importantly the next budget to the rating companies and through our own press releases (other than the Tacoma Weekly and Daily Index – no other media really takes the time to attend all of the meetings in order to report all that is happening in addressing the budget). The City Manager made a presentation last week at study session that shows that currently the Convention Center will not need ‘assistance’ from the General Fund in the next biennium – so this is a good sign (did that make it to the TNT?). As for what the bond rating downgrade means? That means the next time the city want to borrow money, we don’t have as good a credit rating and so might pay more for the loan – it does not impact current bonds. Don’t know about you but I don’t think the city is in shape to borrow any more money at this time until the structural issues are resolved for the General Fund and any new loans have a dedicated revenue source to cover the nut. This city council and staff made very aggressive steps last fall – but you must remember that with the revenue sources that the city depends on for its funding – sales, property (which the city only gets 20% by the way), business, utility tax – pruning the tree back too far and the tree goes dormant and takes much longer to recover, while strategically pruning can get you to the same size of tree but much healthier and fruitful (sorry to use the tree analogy – but I hear you like trees (:-{>

• C Chalky White August 14, 2012

  Close the front door. The sky isn’t falling.

  From the TNT:
  Fitch Ratings on Monday downgraded the city’s unlimited tax general obligation bonds to an A+ rating from what had been AA rating. “It doesn’t cost the city any more,” Wolfgang Opitz, assistant Washington state treasurer, said of the downgrades. “There is no additional capital outlay or cost to the taxpayers for downgrading existing bond debt.”

  What do the letter ratings mean?
  The general meaning of our credit rating opinions is summarized below.
  ‘AAA’—Extremely strong capacity to meet financial commitments. Highest Rating.
  ‘AA’—Very strong capacity to meet financial commitments.
  ‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
  ‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
  ‘BBB-‘—Considered lowest investment grade by market participants.
  ‘BB+’—Considered highest speculative grade by market participants.
  ‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
  ‘B’—More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
  ‘CCC’—Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
  ‘CC’—Currently highly vulnerable.
  ‘C’—Currently highly vulnerable obligations and other defined circumstances.
  ‘D’—Payment default on financial commitments.

• F fred davie August 16, 2012

  I understand that the downgrade of some construction bonds is not the “end of the world,” nor is a multi-milion dollar deficit now in it’s 10th month.

  OTOH, I would prefer that the city be run in such a way that we don’t have budget deficits or jeopardize our bond ratings. A lot of the “problems” that Tacoma is encountering were foreseeable and could have been addressed more forthrightly .

  Maybe we should have had better communications with the Fitch rating service as you point out, David. There are thousands of people on the payroll for the city. Isn’t this somebody’s job?