City plans to take on more debt while cutting budgets
The City of Charlotte is looking at a shortfall of nearly $8 million next year. So why is the city's budget director proposing the city take on nearly $200 million of additional debt? The City of Charlotte gets most of its money for road and neighborhood improvements through bond referendums that voters approve. Unlike Mecklenburg County, the city designates a portion of its tax revenue for building and repairs. The city's Budget Director Ruffin Hall says that provides a fairly stable income to pay off debt - so despite a shortfall, there's still money to build. "That debt service fund we look at on an annual basis and determine how much more debt can we put before the voters and not have to raise the property tax rate to cover that particular debt," says Hall. This year the estimate is $198 million. Most of that money would go toward widening roads, improving intersections, and building sidewalks. Say city council chose to drastically reduce the bonds sizes or not put them on the ballot at all this year. That could leave money for a tax cut. But strangely enough Hall says it could do something else: jeopardize the city's excellent bond rating, which borrowing rates are based on. "One of the key variables to that bond rating is: are you continuing to address your infrastructure needs, your capital needs," says Hall. In other words, Hall worries the city could show it's not keeping up with its infrastructure needs, if it puts too small of a bond before voters. City council members will hear about the city's bond proposals this afternoon. They have until September to decide how much to ask voters to approve.