Frequently Asked Questions - Q27


Question:

You mention that the City’s long-term debt has grown over the last two decades at a rate approaching four times the combined growth in the City’s population and inflation. Won’t placing a cap on total revenues exacerbate the problems in servicing the City’s debt?

Answer:

The obvious answer to gaining control over the increasingly dangerous debt situation is to put some controls in place. If your child continues to run up his/her spending and debts, the answer is not to continually increase his/her allowance at a pace matching his/her spending and debt habits. You teach him/her to prioritize needs versus wants, learn how to better plan the way he/she incurs debt, and live within normal financial means. The same principles apply to government spending and debt management. Obviously, existing City debt will have to be paid. However, it must be brought into a financial planning process that forces the City to plan on a citywide basis and properly prioritizes among operational, debt and capital needs. Under the current debt load, this will probably force some trimming in operational spending, but there is a great deal of fat in the City budget to accommodate such trimming.



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