Cuts in city projects may just be a beginning
It's welcome news that the city has decided to cancel some $60 million in capital improvement projects for the coming year.
Never mind that a lot of hopes were raised when the city announced these projects, then needlessly dashed them.
And City Council members are elected and paid to endure "all this agony with testifying and preparing the projects, and then they just have them cut arbitrarily," as councilwoman Ann Kobayashi put it somewhat testily, to be sure.
What was clear from the moment the administration announced, in October, that it wanted to borrow up to $250 million to finance such projects was that some cuts would surely follow if not by the city, then by the council.
Earlier, in May, the administration had stated that it planned to borrow just $100 million. Perhaps it felt the need to use more restrained numbers then, because it was in the midst of a searing budget debate that might well have ended differently if council members had an inkling of the much higher debt numbers.
The city makes the point that now is a good time to borrow more, while interest rates are down. It makes sense to use some of the money to retire bonds issued when rates were higher.
But anyone who has ever maxed out a credit card understands about debt service, and the city's interest payments threatens to grow to unmanageable levels. Early pronouncements from council members suggest they well understand this, so we're confident that the $60 million cut from the city is just a start.
That's because the city is facing a $159 million budget deficit, with no flexibility on projects that it can't postpone, like landfills and sewer repairs.
For years, the city has staved off the need to raise property taxes by juggling money, trimming costs and digging deep for efficiencies.
The moment of truth is near, however.
Incoming Council Chairman Gary Okino has already unleashed the dreaded "T" word, saying in November that a tax hike might be necessary in next year's budget.
That's fair warning. What we don't need at this point is 200 feel-good capital improvement projects whose $328.5 million price tag will run up the payments due just like those monthly interest payments following a credit card binge.
You can defer capital expenses by borrowing, often sensibly. But the debt service comes out of the operating budget, and you don't receive anything for that money except for the ease and comfort, now forgotten, you bought for yourself years ago.
One responsible way to begin facing our budget realities, then, is to trim back new capital expenditures to essentials.