Debt payments to grow by $1 million next year
Anyone that has taken out a mortgage, car loan or racked up credit card debt knows that owing money costs money. It kind of reminds me of this Louis C.K. joke, where he laments that an overcharge on his bank account has dropped his net worth into the negatives, effectively requiring him to have more money just to be broke.
So the city government will have to factor the cost of its debt into the general budget. And the debt expenditures currently budgeted for the next, nearly $10 million, are actually more than the total budget for many of the city’s departments.
Debt expenditures are expected to rise by more than a million dollars, jumping from a budgeted $8.75 million in 2013 to a proposed $9.98 million in payments in 2014.
The majority of those expenditures will come from the city’s general fund, but $2.5 million of it will be paid by the Capital Project Revenue District, a special fund that was set up in 2007 to funnel property tax funds into a special bank account that could be saved to pay for capital projects.
This is one part of the budget that is likely to draw some heat when the City Council starts to get their hands on the budget. Mayor Kim McMillan’s use of CPRD funds to pay for operating costs during her first budget in 2011 created a stir that was only resolved by her own tie-breaking vote. McMillan seemed aware of the possibility of future flare-ups, making note at several points during Interim Finance Director Debbie Frazier’s debt presentation that debt expenditures were growing because of action under previous administrations.
“Much of this is old debt and it was entered in many years ago, and it grows because the payback schedule, in simple terms, increases over time as you pay the debt back,” McMillan said Tuesday. “So when you say it grows it’s not because we’re incurring new debt it’s because the debt that already exists increases in the amount that we need to pay.”