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Joyce Clark Unfiltered

For "the rest of the story"

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

For the next 6 weeks or so, the city council will be focused on Glendale’s budget. There will be a series of workshops devoted to it. The first one was held on March 7, 2017 and reviewed revenue projections, sources of the city’s revenues and the areas in which those revenues are spent. Keep in mind, per state law, Glendale and every other municipality must adopt a balanced annual budget. What does that mean?  That means the total of the city’s expenses must be shown to be covered by the revenues it receives.

There are 2 parts to the city’s budget: its General Fund budget and the Enterprise Funds’ budgets. The General Fund budget covers all expenses incurred by the city except for: Water, Sewer, Sanitation and Landfill. These 4 areas are called Enterprise Funds and they get their revenues from rate payers or users.

The pot of money for the General Fund has 2 components: all revenues and a fund balance (a rainy day fund). The money is paid out to 5 areas: expenditures, operating costs, the Capital Improvement Plan, our debt payments and a contingency fund. Except for debt payments which are a fixed cost, the other 4 areas compete against one another for the available money.

Where does the city get its money? From 5 sources:                                                                          

  • Sales tax                        44%                    
  • State shared revenue      26%                   
  • Other                             17%                  
  • Transfers In                    11%
  • Property Tax                     2%

There is one special note about the sales tax the city collects and that is, it no longer manages or collects it. A year or two ago, the state legislature, in its wisdom, mandated that it would collect every city’s sales tax and distribute those funds collected to each city. Now Glendale has to pay the state nearly half a million dollars to collect its sales tax…a new expense that Glendale never had before. To add insult to injury, this program rolled out completely in January of this year, 2017. To date, the state has only collected and dispersed approximately 66% of the money Glendale itself usually collected. I contend that in addition to our regular budget planning for next year, the city should be planning an alternate budget in case the worst happens and it does not receive all of the sales tax from the state to which it is entitled.  

There’s also another gimmick the state uses and that is with regard to state shared revenue. The largest component is state shared income tax. Every year we pay income tax to the state but cities do not get their share the following year. Instead the cities are paid two years later. That means the income tax you pay this year for 2016 won’t be seen by the cities until 2018. Think of the interest the state makes on millions and millions of dollars in income tax for that extra year until they disperse the money to the cities. 

There are no certain figures for expenses within the General Fund budget for this year as we are in the process of crafting this year’s budget. In last year’s Fiscal 2016-17 General Fund budget, here were the areas of expense:

  • Police department                43%
  • Fire department                   22%
  • Other                                  16%
  • Non-departmental                  9%
  • Public Facilities, Rec & Events  6%
  • Public Works                          4%

Note that 65% of the city’s money goes to pay for Police and Fire. When you see the city’s total budget of approximately $500 million remember that only a portion of that is the General Fund Budget (should be an estimated $200 million).  The remainder (an estimated $300 million) is either Enterprise Funds or other special funds, such as the dedicated public safety sales tax or the transportation sales tax and as dedicated funds, cannot be used for any other purpose, such as the General Fund.

Out of a General Fund budget of approx. $200 million, 65% or approx. $130 million is for Public Safety (Police and Fire). That leaves about $70 million in the General Fund to pay for operating expenses (examples: all other employees’ salaries and benefits; our debt payments and our Capital Improvement Plan). Over half of the remaining $70 million (approx. $45 million a year) goes to pay the city’s debt service. That leaves us with an annual General Fund budget of $25 million a year.

As you can see, the city’s annual budget and the processes to create it are pretty complicated. It’s all in the numbers and a basic understanding of what numbers go where.

In Part 2 of Glendale’s budget 101 we will look at the proposed Capital Improvement Program or CIP. This is the budget portion that will be discussed by city council on Tuesday, March 21, 2017 at its 9 AM workshop. This will be televised live on Cox’s cable channel 11.

© Joyce Clark, 2017          

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It has been 18 years and 68 days since the city’s pledge to build the West Branch Library.

City council held its first budget workshop on February 16, 2016. Here is the schedule of future budget workshops:

  • March 15, 2016             9 AM
  • April 5, 2016                 9 AM
  • April 19, 2016               9 AM
  • April 21, 2016               9 AM

This first budget workshop was a review of all budget components as of December 31, 2015 or the first two quarters of Fiscal Year 2016. The only item which required council consensus for direction was the issue of raising the Secondary Property Tax rate to the maximum of 2% as allowed by state law. Council consensus was…nothing. They gave no direction to staff. Look for the vote on acceptance of a property tax rate in June when council must publicly vote on the issue.

Senior staff’s presentation on the budget’s performance was pure “government speak.” Here’s a good example, “(General Fund) Revenues are $11.2 million or 11% higher than revenues at the same time last year.” Boy, that sounds really, really good. Wait a minute. Staff then said, “Out of the $11.2 million increase in revenues, $8.3 million is due to consolidation of the general fund sub-funds into the General Fund.”

In plain English what that statement means is this. General fund sub-funds are the Arena, Camelback Ranch, Zanjero, Civic Center and Stadium events. This is not a complete list but you get the idea. Prior to this Fiscal Year, 2015-16, the sub-funds stood separately. Staff had to report on the revenues received and expenditures of all sub-funds. This Fiscal year they were rolled into the General Fund for “accounting purposes.” No longer is there a separate accounting of the sub-funds’ performance. Hmmm.

Staff went on to say, “General Fund City Sales Tax collections are $48 million which is an increase of $7.3 million or 18% over the same time last year. Approximately $6.0 million of the increase is attributable to the consolidation the sub-funds into the general fund. Without including the sub-fund revenues, city sales tax increased by $1.3 million or 3%.” This 3% figure is in line with the federal GDP.

In terms of General Fund expenditures staff reported, “The actual (General Fund) expenditures increased by $15.4 million over the same time last year. This increase is primarily due to the consolidation of the general fund sub-funds into the General Fund ($9.7 million) and reclassification of Technology and Technology Projects ($5.0 million)…” Once again most of the expenditures are attributable to rolling the sub-funds into the General Fund.

The bottom line is this. Half way through Fiscal Year 2015-16 the General Fund has an excess of $8.3 million. It can be assumed that this excess is due in great measure to the $9.0 million reduction (from the previous figure of $15 million) in the arena management fee paid to IceArizona.

Tonight, February 23, 2016 city council will host its regular voting meeting. Guess who will be AWOL? Yep, Councilmember Sammy Chavira…once again. Be reassured. He will participate telephonically.

Three agenda items are worth following: Item 20 is Resolution 5071. It is an acceptance of a $49,000 grant from the Arizona Sports and Tourism Authority to be used to help develop an archery range at Heroes Park; Item 21 is acceptance of Ordinance 2975 reflecting rezoning request ZON15-10. This action will allow for development of the Westgate Healthcare Campus PAD at the northwest corner of 99th Avenue and Glendale Avenue. This is a very welcome project and provides a fantastic compliment to Dignity’s Westgate Hospital Campus just north of this proposed project; and lastly Item 22. Council will vote on the adoption of the Loop 101 Scenic Corridor in north Glendale. This is another very welcome development that warrants expansion of this designation all along the Loop 101 within Glendale with the only exception being a narrowly tailored Westgate area.

Stay tuned for more reports on Glendale’s budget as council meets in March and April of 2016.

Don’t forget…it’s budget season in Glendale.

© Joyce Clark, 2016

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 309 days since the city’s pledge to build the West Branch Library.

PLEASE NOTE: SINCE THE INCEPTION OF MY BLOG I HAVE REACHED ANOTHER MILESTONE. AS OF NOVEMBER 4, 2015 THERE HAVE BEEN OVER 300,000 READS OF MY BLOGS. MY THANKS GOES OUT TO ALL WHO HAVE SIGNED UP TO RECEIVE THEM ON A REGULAR BASIS AND A SPECIAL THANKS TO ALL WHO HATE MY COMMENTARY BUT KEEP COMING BACK TO FIND OUT WHAT I AM SHARING ABOUT GLENDALE AND ITS PLAYERS.

On October 20, 2015 at city council workshop council was presented with a menu of city properties that could be sold. Amazingly, not one…let me repeat that, not one property was put on the block.

Cushman & Wakefield, the city’s consultant, proposed the possible sale of nine city owned facilities:

  • Water services lot at the northeast corner of 99th Avenue and Bethany Home Road for $7.5 million
  • Glen Lakes Golf Course at 54th Avenue and Northern Avenue for $5.2 million
  • Desert Mirage Golf Course at 87th Avenue and Maryland Avenue for $450,000
  • St. Vincent de Paul Thrift store in downtown Glendale for $300,000
  • Thunderbird Lounge and adjoining properties in downtown Glendale for $545,000 to $727,000
  • Bead Museum in downtown Glendale for $400,000 to $500,000
  • City Court site in downtown Glendale for $3 to $5 million
  • Bank of America building in downtown Glendale for $7.35 million

The only properties that can legitimately be taken off the sales block are the two golf courses. Desert Mirage Golf Course has long term contractual obligations that could prove problematical and Glen Lakes Golf Course land would be used for residential development that would violate a long standing commitment to every home owner surrounding the property. In addition, these two properties offer a genuine amenity to every Glendale resident.

So, why won’t council sell off any of the downtown properties? Well, we might use them sometime in the future…the very distant future. Or we can’t sell them because the sale price is less than the city paid originally. Reality…since the Great Recession, many properties nationally and regionally have sold for less than their purchase price.

Each of these properties, vacant or developed, have annual operating & maintenance (O&M) costs. What is the total annual O&M cost to the city for each of these properties? If they were sold the city would no longer have to pay the O&M costs in addition to receiving the purchase price.

The sale of these properties accomplishes several goals. It takes the annual O&M costs off the books permanently. It earns the city an estimated $20 million plus. These funds should go directly into the city’s Contingency Fund (Unappropriated Fund Balance).  That, in turn, would take pressure off of putting every available nickel in the General Fund into Contingency. It would create the opportunity to utilize General Funds for needs long ignored since the Great Recession.

The sale of these properties also creates a major benefit for downtown Glendale. How many Task Forces, over the years, have made recommendations for the revitalization of downtown Glendale? Too many, going all the way back to the Miracle Mile Citizen Task Force. What has been achieved as a result? Nothing. In one fell swoop, with the sale of these properties the city has the opportunity to kick start downtown’s revitalization. No one is going to buy a downtown property without plans to develop. That’s illogical. An investor in a downtown property expects a return on that investment and that can only occur with the development of the investment. The beneficial and productive use of these properties immediately will do more to revitalize downtown Glendale than the unanswered recommendations of another dozen Task Force groups.

It’s time for the city council to let go of these properties. There are genuine benefits to be achieved with their sale. In the meantime, as long as the council digs in its feet and refuses to sell anything, I have a bridge in Brooklyn to sell…interested?

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 96 days since the city’s pledge to build the West Branch Library.

On March 25, 2015 the Glendale Star ran a story on the elimination of the city’s General Fund debt payable to the city’s Enterprise Funds (water, sewer, sanitation and landfill). Here is the link:  http://www.glendalestar.com/news/article_4fd7f4dc-d181-11e4-b56b-93c81bbb5cc5.html .

In an effort to buy additional time to secure a buyer for the NHL Coyotes who would pledge to keep the team at Glendale’s Gila River Arena, a previous city council approved borrowing $15 million from the city’s water and sewer funds, $40 million from its landfill fund and $5 million from its sanitation fund. The revenue was used to pay the NHL to manage the arena for two years while the process of finding a team buyer continued. At the time council also approved a repayment plan, using General Fund revenue to pay the Enterprise Funds back with interest. It was a solemn pledge and a commitment that the previous council never anticipated future councils would renege upon. The unthinkable is about to occur. At a recent workshop following the recommendation of Tom Duensing, Glendale’s Finance Director, a majority of council plans to do exactly that.

When Councilmember Tolmachoff asked what would be the consequences of such an action, Duensing replied, “You could do it a number of ways: you could do rate increases, you could defer maintenance, you could cut your operating costs.”

There were questions unasked that still demand answers:

  • While this action might make the general fund balance sheet look better, what impact does it have on the balance sheets of water and sewer, the landfill, and sanitation?
  • By recording the former “loan” to a fund transfer, doesn’t it reduce the assets on the balance sheets of those funds?
  • How does the reduction in financial assets impact the bond ratings of the water and sewer fund and the landfill fund?  While the proposed action may assist in the General Fund bond rating, doesn’t the converse action harm the Enterprise Funds ratings?
  • Doesn’t this action reduce the funds available to water and sewer for maintaining and upgrading the water and sewer systems? Duensing in his answer to Tolmachoff implies that it does.
  • If the Council approves this action, doesn’t that mean that a water and sewer rate increase will be necessary and supported by the Council? If a rate increase occurs, it looks like we can lay the evaporation of a pledge to repay the Enterprise Funds at the feet of retaining the hockey team as an anchor tenant at the city owned arena.

Duensing’s proposal is moving the pea underneath a different shell. It’s a magical, accounting trick designed to satisfy the rating agencies. The problem is that it sets precedent. Who, whether it’s a developer, a citizen or a company doing business with the city, will trust in the city’s word if it is willing to renege on paying a debt? If a water, sewer or landfill rate increase is proposed and adopted by this city council citizens will have every right to be angry for it will be driven by a broken promise to reimburse the Enterprise Funds. Glendale rate payers of the water, sewer, landfill and sanitation services will have every right to assume that any proposed rate increase is driven by money borrowed from these funds and paid to the NHL to run the arena for two years.

Duensing appears obsessed on building up the city’s reserve funds (contingency). While building the city’s reserve back up is necessary and critical his solutions are to keep the sales tax increase permanent and now, to raise Glendale’s property tax rate by 2%. He appears to have only two tricks in his bag.

Sterling Fluharty of the Glendale Star in writing an article entitled City decides not to cut taxes, in its online edition of April 6, 2015, reports, Glendale City Council had few objections two weeks ago when the acting city manager and financial director announced they were abandoning plans to lower the sales tax rate and making preparations for raising property taxes. Here is the link: http://www.glendalestar.com/news/article_b6c5e5e6-dc99-11e4-8961-4fb07a583a64.html#.VSNVhK1dGb8.twitter .

Last December Duensing was still pitching lowering the sales tax rate. Fluharty in his article states,  Duensing published a five-year financial forecast that month (December, 2014) that assumed the council would approve annual reductions, making the sales tax rate 2.85 percent in 2015-16, 2.825 percent in 2016-17, 2.8 percent in 2017-18 and 2.775 percent in 2019-20.” What information does senior management and the council have (not shared publicly) to cause them to not only reject a reduction in the sales tax rate but now to increase the property tax rate?

Since the new council was seated in January, 2012, adopting Duensing’s recommendations it has:

  • Made the increase of 2.9% as a temporary sales tax increase permanent
  • Approved a management agreement paying IceArizona $15 million a year
  • Will approve construction of a parking garage at Westgate for $46 million + over 3 years
  • Will approve a 2% increase in property taxes

Where is the council commitment to cut expenses and to live within the city’s means? It seems their only solutions to solving the city’s ongoing financial problems is to keep the increased sales tax rate and now to raise the property tax rate.

Over the next 3 years the General Fund will have to absorb an additional $46 million plus as brand new debt. That figure does not include the ongoing debt for the baseball park, the Westgate Media Center and is parking garage, the Westgate Convention Center, the annual $15 million payment to IceArizona and the construction debt on the arena and the Public Safety Training Facility…as well as other debt I have failed to include.

During council’s discussion of a property tax increse while the sales tax increase does not diminish Mayor Weiers said, “At least we’re giving our citizens something, certainly in the right direction, anyway.” What exactly are the Mayor and council giving to its citizens? A screwing? It appears the right direction for Mayor Weiers and this city council is to raise yet another tax.

©Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 82 days since the city’s pledge to build the West Branch Library.

This afternoon, March 24, 2015 at 1:30 PM the city council will be meeting in workshop session to receive more information on the proposed Fiscal Year 2016-17 budget. The focus will be on the Capital Improvement Program.

The City of Glendale has posted the Capital Improvement Program (CIP) 2016-2025 on its website.  Here is the link: CIPDRAFT3_24v

The current proposed CIP has no funding from the General Fund for anything other than construction of a parking garage at Westgate. One note: you will see funding for water, sewer and sanitation projects but their bond repayment is not from the General Fund. They are paid from stand alone Enterprise Funds and the Enterprise bonds issued are paid back from the rate payers who use those services. You will also see funding for some street and airport projects but the funding for those does not come from the General Fund either. They are funded from the voter approved, dedicated portion of the sales tax that goes into the Transportation Fund.

The city’s General Fund is used to pay ongoing operating (the largest line item being employee salaries) and maintenance expenses (for city facilities) as well as to pay back bonds that have been issued for the following categories:

  • Fund 1980 – Street/Parking bonds
  • Fund 2140 – Open Space/Trails bonds
  • Fund 2060 – Parks bonds
  • Fund 2160 – Library bonds
  • Fund 2040 – Public Safety bonds
  • Fund 2080 – Government Facilities bonds
  • Fund 2130 – Cultural Facility bonds
  • Fund 2100 – Economic Development bonds
  • Fund 2180 – Flood Control bonds                                                                                              

The major General Fund bond issuance in the draft CIP 2016-2015 is for a parking garage at Westgate. It is Project 68124, Parking garage at Westgate with the following schedule of funding:

  • FY 2016 $  2,404,337
  • FY 2017 $20,000,172
  • FY 2018 $23,999,730
  • TOTAL  $46,404,239

Within the General Fund bond capacity funding are a few, small street projects (about 3), each less than $350,000; $1.6 million to upgrade storm drains; and an upgrade of the police digital communication system for $1.9 million. There is nothing even considered until after 2020 for Open Space/Trails, Parks, Library, Government Facilities, Cultural Facilities or Economic Development. These are all quality-of-life amenities that make a city great. They are the projects that attract new residents to Glendale and new businesses that appreciate the amenities that will help them attract quality employees. All of that is forsaken for a new parking structure at Westgate for over $46 million dollars. Trust me…that price tag will increase over time.

This new parking garage will cost a little under a million dollars annually for utilities and maintenance. A new operating expense will be added to the General Fund. For the past ten years staff was required to show where new money for a new operating expense would come from. The narrative for this expense within this CIP is cursorily dismissed with “Additional O and M will be absorbed within the current operating budget.”

The bottom line is that Glendale still has a structural deficit. To date, former City Manager Fischer and the Director of Finance, Tom Duensing, have used band aids. They have refinanced the city’s debt (done previously and historically when the market is favorable) and they have relied on making the temporary sales tax increase permanent. They have never attacked the real problem – the city is spending more than it takes in while it’s major debt components (construction debt for the arena and ball park and the annual $15 million dollar payment to Ice Arizona for managing the arena) bleeds the city dry.

Until senior management decides to live within its means by cutting General Fund expenses and resolves the construction debt burden and the $15 million annual payment burden we won’t see the city build amenities that can be used by its residents.

Apparently senior management believes there is some debt repayment capacity within the General Fund. What is it being used for? A parking garage at Westgate. Can you imagine what could be done with $46 million dollars? The city could build the West Branch Library, and still have money left over to renovate and upgrade existing parks and build some new parks as well. In other words, that money could be used to upgrade your quality-of-life and attract new business development to Glendale.

Why a parking garage at Westgate now? There is a 2002 contractual obligation with the Arizona Sports and Tourism Authority (I no longer have a copy of the agreement) that requires the city to guarantee 6,000 parking spaces for games. Those spaces have been located within Westgate since the stadium opened. As Westgate’s land is used for new development those 6,000 spaces diminish. However, there is still a great deal of raw land to the east and north within Westgate. The purpose of the Youth Sports fields construction just to the east of the stadium was to relieve any parking spaces lost in Westgate proper. It provides 4,000 to 6,000 overflow parking spaces that still fulfill the agreement’s requirement for parking. Apparently that’s not good enough for the Bidwill’s who have been grousing and pushing for this parking garage for several years. So, the city has caved and will build the parking garage to be completed by the end of 2017. Great for the Bidwills…not so great for the residents of Glendale.

It’s a matter of priorities. It seems the greatest priority is to build a parking garage in Westgate while bonding for another $46 + million dollars and lesser priorities — to be fulfilled someday — are the quality-of-life amenities that Glendale citizens can enjoy.  Is this your priority? If not, what are you going to do about it? Sit back and eat it? Or let your councilmembers know what matters to you?

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

 

In the August 24, 2013 edition of the Arizona Republic there is a story entitled Glendale ratings lowered by Russ Wiles and Caitlin McGlade. They report that Moody’s Investors Service downgraded Glendale’s credit ratings from A2 to A3. Even with the downgrade, Glendale’s credit ratings remain in the superior “investment grade” category. It is an omen of Glendale’s future if this council does not act boldly.

Moody’s says, “The downgrade of the GOULT (General Obligation Unlimited Tax) rating primarily reflects unusually weak management practices denoted by ongoing internal and state-controlled investigations of certain financial actions dating back to 2009. The report also cited the “outsized” risk exposure to the Coyotes under a new arena deal that requires the city to pay an annual $15 million management fee to the team’s owners.” Moody’s concerns relate to Glendale’s large debt burden and an overburdened General Fund. It went on to say, “Additionally, the outlook reflects our expectation that Glendale will remain challenged to balance its budget over the medium term due to a high level of fixed costs.” What does it mean and what effect does it have on Glendale?

It means that Glendale’s financial debacle on instituting the Employee Retirement Program (ERP) at a cost of over $6M taken primarily from its Trust Funds, the continuing high fixed costs to the General Fund and its commitment to pay Coyotes ownership $15M a year have been recognized and are of concern to credit rating agencies. The downgrade means that when Glendale has to issue bonds the interest rates will be higher, considerably higher. A simple analogy is that when you wish to buy a house you are pre-qualified. If you have a good credit score your interest rate is low. If you have a poor credit score your interest rate is much higher. Your monthly mortgage payment incorporates that interest rate causing your payment to be within a comfortable or decidedly uncomfortable range. It affects the size of and the quality of the house you can afford to buy.

Glendale ‘s Capital Improvement Program (CIP) will not see new parks, libraries or pools for quite some time because its bond issuances are impacted by the downgraded credit rating. But there are other needs. Bonds are issued to maintain and upgrade Glendale’s basic infrastructure. Moody’s kept the A2 bond rating intact for Glendale’s water and sewer bonds primarily because those services are funded by the users of those services and are not typically impacted by its General Fund. Although Glendale receives Highway User Revenue Funds (HURF) and other shared revenue funds they typically are supplemented by bond issuances for such projects as major road construction. One example is the construction of the Northern Avenue Parkway. Although the state and other cities are sharing in the costs of construction Glendale’s costs are substantial and it issues bonds to cover those costs. There will be impacts, immediate impacts to the issuance of bonds for Glendale’s aging and new but critical infrastructure.

What does Glendale need to do to reverse the downgrading of its bonds? How does Glendale fix it?

SOLUTION ONE: One issue cited by Moody’s is being dealt with now and is the implementation of the recommendations offered in the external audit report. Their adoption will strengthen Glendale’s financial policies, restore integrity to the system and send a signal not only to the bond market but to its citizens that it is serious about reform.

SOLUTION TWO: Another issue cited by Moody’s is the $15M payment to the Coyotes ownership. I can see it now. Members of the Coyotes nation saying here she goes again…blaming the Coyotes. I fully understand the desire to protect from and deflect away any unfavorable information associated with the deal or ownership. Yet it remains the “elephant in the room” that must be acknowledged. It is a decision that Moody’s has used as one of the factors in downgrading Glendale’s bond rating. That’s a fact. There is no immediate fix. Glendale is bound by a 5 year contract and expenses of $75M in management fees over the next five years. It will have to reassess its position after a year’s worth of hockey games to see if the “enhanced revenues” did indeed produce the $9M a year so desperately needed. If the goal is accomplished it provides Glendale some much needed breathing room. If the goal is not achieved Glendale will have to compensate for the revenue loss by making even further adjustments to its General Fund.

SOLUTION THREE: The last major issue is Glendale’s overburdened General Fund — not the Enterprise Funds of Water, Sewer and Sanitation. These funds derive their revenues from rate payers, you and me, when we pay our monthly water, sewer and sanitation bills. The General Fund’s expenses continue to outstrip the revenues it receives in the form of sales tax collection and state shared revenue. Options are limited: sell city assets (a short term fix); further employee reductions; create more efficiency; make draconian cuts; or a combination of all of these options. This is a painful and touchy subject for all. 60% of General Fund expenses are attributable to public safety. Glendale is at the point where it has gangrene in its leg. Do not amputate the leg and watch Glendale die as the gangrene rapidly spreads through the body or amputate the leg; stop the gangrene and Glendale will live long into the future. This is no time for political posturing. This council, each and every one of them, must adopt the will and the internal grit to do whatever is necessary, including cuts, to guarantee Glendale a healthy future. Can they? I hope so. There is no way around it. Their only mandate is to fix it.

©Joyce Clark, 2013

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