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Big boost in Jax debt capacity under Mayor's proposal

Big boost in Jax debt capacity under Mayor's proposal

Big boost in Jax debt capacity under Mayor's proposal
Mayor Alvin Brown has earmarked $11.8 million in his budget for Jacksonville Landing renovations.

Big boost in Jax debt capacity under Mayor's proposal

Jacksonville’s Mayor is looking at breaking out the credit cards for the city’s budget.

WOKV has learned the Mayor’s 2014-15 budget proposal- topping one billion dollars- recommends a large increase in the amount of debt the city could acquire.

“We would see borrowing being authorized up to $230 million over what we’re already doing,” says Council President Clay Yarborough.

Every year, the City considers using the banking fund- essentially borrowing money to fund various capital projects.  Information I’ve obtained from the Council Auditor’s Office shows the total recommended in the Mayor’s proposal is higher than any allowance at least for the past seven years.  Furthermore, it’s a more than 400% increase over the ceiling allowed in the current budget- $42,687,928.

“It is a substantial increase,” says Council Auditor Kirk Sherman.

It’s not surprising there would be a larger borrowing request for the upcoming budget because this is the first time in several years that Jacksonville is seeing growing revenue and an opportunity to invest in some areas of infrastructure that have been neglected in prior years.  The concern already emerging from City Council, however, is why all of these projects should be started this budget.

“I find this to be practically impossible to justify to our constituents,” Yarborough says.

The Mayor’s budget outline proposes some big investments, especially in Downtown Jacksonville.  The projects he recommends borrowing for range from $11.8 million for revitalizing the Jacksonville Landing to $4.2 million to demolish the old County Courthouse to $300,000 for converting the Baseball Grounds in to the new home field for the Jacksonville Armada.  There are projects in other parts of the city as well, including $750,000 to renovate Five Points and $350,000 for the Equestrian Center.

“There’s a lot of worthy projects that are proposed to be funded,” Yarborough says.

I spoke with the City’s Chief Financial Officer Ronnie Belton and Chief Budget Officer Glenn Hansen.  Both believe the price tag that appears in the budget is misleading.

Hansen says, first of all, that the number doesn’t reflect the debt which the city has continued to repay.  Information obtained by WOKV shows a continual decline over the past few years in the overall amount of debt Jacksonville has.  Hansen says the number also makes it appear as though all of the borrowing would take place at once along with the new budget taking effect. In fact, the borrowing is a gradual process that happens over the life of the various projects.  Finally, Belton says the debt is also a limit, rather than a real price tag- it would authorize the City to borrow up to $230,080,597. He says the City often comes in under the annually requested limit.

I requested information about actual v. projected borrowing year-over-year on Monday night, but as of the time this article was published that information was not made available.

Sherman understands the proposal is a limit and spread out over years, but says it doesn’t make him feel any more comfortable.

“These are projects that the Council and the Mayor determines are necessary, so ideally, eventually, the debt would be taken down,” Sherman says.

The overall $230 million increase incorporates borrowing outside of the general fund, meaning not all of it deals directly with your tax dollars. The capital projects mentioned above and many more bring the direct general fund banking fund request to $99,752,712. That’s still about $69 million more than the cap last year, and about $39 million more than the amount of borrowing we were projected to need as determined by last year’s budget negotiations.

During his budget rollout, I asked Jacksonville Mayor Alvin Brown why he wanted to get all of these projects rolling this year. He says these are priorities that help the city continue to grow and that it is time to start making economic investments.

Some City Councilmen liken then spending instead to “lollipops”, which are being given out with little fiscal prudence.  It’s clear at this stage that the budget faces heavy scrutiny as it now goes to City Council where it will be vetted and ultimately- in some form- approved by October 1.

 An emerging question beyond the spending is also how the Mayor balanced the budget itself.  Yarborough was surprised to see a $13.4 million settlement the city received dealing with the development of the Shipyards programmed in to the budget.  The Council had voted to put that in a special reserve account they had to vote to allocate.  The Mayor’s Office tells me they have a legal opinion that allows them to use the settlement to specifically pay down debt service. 

The budget also recommends taking $16.8 million from City reserves. Sherman’s early analysis shows there could be even more that’s actually tapped, and that leads to questions- he says- about whether the city will have the legally required amount of reserves on hand.

“In this case, it’s more a matter of prudence,” he says.

Sherman stresses that this analysis is in the very early stages, and hearings soon to be undertaken by the Council will continue to give a clearer picture on the budget that was presented.  The Mayor’s Office believes the presented budget is balanced.

One source that’s not directly tapped in the proposal, and not likely to be through City Council this year, is your property tax payout. The Mayor’s outline uses the rate which Council approved last year- which is a rate they had increased in order to fund the multi-billion dollar holes, or extraordinary lapses, the Mayor had put in his proposal at that time.  Because of rising property values in Duval County, your payout will likely be a little higher, even at the same rate as this year.

WOKV will continue to follow the budget debate and what it means to your wallet. You can now listen LIVE to WOKV and see all the latest news with our FREE app, available for download for both Apple and Android devices.

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