WPCNR MR. & MRS. & MS. WHITE PLAINS VOICE. August 16, 2005: A WPCNR reader responds to Mr. Carlson's discussion of the city debt analysis:
John,
In fairness to all involved, I would appreciate an opportunity to again respond to Mr. Carlson’s
comments. It is very apparent that he does not understand the difference between corporate and
municipal financing and his constant attempts to portray himself as an “expert” only serve to show how
little understanding he has of the actual financing of the City. It’s important for you, John Bailey, to
continue to serve the citizens with the truth.
Thank you,
Ian
In response to Mr. Carlson’s August 15th rebuttal I
would like to respond with the following:
1) The construction of the City Center Garage began in
fiscal year 2001 to support the new City Center retail
facility. This facility was not completed until
October 2003. Although the City expected to use the
additional sales tax revenue from the retail center to
pay the debt service on this facility, payments needed
to be made during the construction period.
(More)
As a result, the City intentionally drew down on its
fund balance, which represents surplus taxpayer money,
rather than unnecessarily tax its citizens during
these transitional years. What would Mr. Carlson do?
Tax our citizens rather than use fund balance?
2) The City’s annual audit and all bond offering
statements indicate that the City’s per capita debt as
of June 30, 2004 was $857 per person. These numbers
are developed by a formula under NYS Law and filed
with the State Comptroller. The numbers Mr. Carlson
is referring to are projections and include the debt
service of the former Parking Authority. However,
under NYS law, the Parking Authority and current
Parking Department are exempt from this calculation
since these are revenue producing facilities that are
not supported by per capita tax dollars.
3) In fiscal 2001 the City ended the year with total
debt of $42.2 million, $26 million of which was tax supported. At
June 30, 2004, the City’s total debt was $66.3
million, $45.4 which was tax supported. The reason
why the City’s debt increased beginning in fiscal
2002, was due to the City’s decision to borrow $21
million to finance the City Center Garage and to use
the sales tax revenue generated from the retail center
to pay off the debt.
I don’t think anyone would dispute the fact that this
garage was essential to the success of the City Center retail
facility. Furthermore, the City’s tax supported debt
has actually decreased $2.1 million since fiscal 2002.
4) The City refunded its debt in fiscal 2004 to save
over $200,000.
That is the point. Refundings are good, they save our
taxpayers money by paying our debt off faster and
cheaper. They do not prolong the payment of principal
as you have suggested.
5) The City’s current outstanding debt is $66.3
million. Since the City’s third quarter report an additional $7 million
in principal has been paid off. The bonds that have
been authorized by the Council have not yet been sold
and are therefore not outstanding debt of the City.
By the time they are, other bonds will be paid off,
keeping the city total outstanding debt virtually
unchanged.
6) You indicate that you want to communicate to the
citizens of White Plains what their actual debt per
household is. My question is how can the debt per
household be higher than the average city property tax
bill? Wouldn’t it stand to reason that City residents
are not paying for this bill?
Your analysis fails to consider all the commercial properties, as well as the
users of the parking and water systems, that are not
residents but contributing towards the City’s debt
service payments.
7) In summary, we all care about the future of the
City.
The City of White Plains has only exhausted 14%
of its total debt limit under New York State law. In
recent years its debt per capita has decreased from
$892 to $857. The City’s debt levels are minimal and
well below average. Over the last several years the
City has taken advantage of extremely low interest
rates by making long term investments in our
infrastructure at substantial savings for our
taxpayers. This has all contributed to the success of
this City and its desirability and affordability over
the long term.
