Politically, it would be hard to beat the proposed new city budget unveiled by Mayor Jeremy Harris last week.
He holds the line on property taxes and even substantially reduces taxes for apartment owners, who have long complained they have been unfairly treated.
He doesn’t add many politically appealing bells and whistles, but that is understandable given tight money constraints.
As Harris points out, the 2001-2002 budget in real terms (that is, adjusted for inflation) is lower than the budget way back in 1994. That’s a tribute both to tough management of city spending and some creative use of funds and sources.
The creativity this time around was use of highly technical borrowing procedures that will let the city defray big chunks of its debt service (its "mortgage," if you will) to the future.
Until recently, the city repaid its debt with principal payments spread equally or on a level basis over the life of the loan. This in effect "front-loaded" principal payments relative to interest payments. Under the new system, using a technically complicated form of commercial borrowing, the city can restructure its debt so that more of the principal is paid down the road, with current payments focused on interest.
The real-world impact of these changes is to reduce debt service in the near future by tens of millions of dollars, dollars that can then go to other demands such as union raises and health and retirement payments.
This doesn’t reduce the amount that must eventually be paid on the debt, but it pushes some of the principal payments into the future when presumably cheaper dollars can be used to pay off today’s loans.
Today’s savings will become a budget reality for some future mayor.
The details of all this will have to be sorted out by the City Council, which has tentatively announced itself impressed with this budget.
Since the members of the current Council will all be out of office (due to term-limit laws) before long, there may be a temptation to be transfixed by the short-term virtues of this budget over potential long-term implications.
That would be a mistake. Harris and the Council can rightly take credit for a tough, no-nonsense approach to city spending over the past half-decade or so. They should leave that legacy intact for future mayors and future councils by ensuring that the budget finally passed is as good as it now looks.
