Frequently Asked Questions - Q24


Question:

You present a conflicting picture. First you say that the City has more than enough net revenues from its water and sewer and airport operations to service the related revenue bond debt, yet in the last two decades the City’s total gross bonded debt has increased at almost four times the combined rates of increase in inflation and population. How can that be?

Answer:

In addition to conducting very aggressive capital improvement plans (with resultant debt) since 1992, in the early 1990s the City refinanced most of its long-term debt. However, instead of setting the tremendous refinancing savings aside for debt service, the City plowed the money into cost of operations (the legality of which should be reviewed). Thus the build up in debt was caused by both an unrestrained capital spending program and poor debt management.



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