Mr. Cason’s Commission–Meet the Big Spenders

April 27, 2011 Leave a comment

The first major decision of the Cason Commission was apparently innocuous, but it was a decision to spend $22 million of newly borrowed money for vaguely defined capital projects.  This is the local equivalent to doubling down on the current national debt crisis.

This is your household’s equivalent of getting a bigger mortgage to add a room or two to your house in middle of a financial crisis.

This decision doesn’t stand up under the most elementary financial and economic analysis.  The Cason Commission, with the exception of Mr. Cabrera, has shown itself incapable of asking even the most basic questions about this “surprise package.”

Aren’t you supposed to make these kinds of decisions by first looking at the city’s budget?

No public discussion, no community involvement in the project list, no serious questions from the commission about the economic, social and financial feasibility of the investments.  The Cason Commission took the city manager’s word that we have a $6.5 milliion reserve:  are we sure this is enough, what is our income, what is out total spending.

Has the Biltmore problem been solved?  Have the pension problems been ameliorated?  Has the organizational inefficiency of the city been improved?  Have taxes been reduced from last year?  Where are the questions?

Why hasn’t the Cason Commission begun to resolve or just talk about our really important financial and institutional problems before running out and spending $22 million.

Filed under Coral Gables, Finance, Government

Coral Gables’ New Mayor and Commission–First Big Step is Backwards

April 26, 2011 Leave a comment

Only with profound concern and disappointment one observes today’s vote of the new mayor and commission to increase the city’s debt to spend on millions of dollars of 17 new projects-albeit at a lower interest cost, but at the same annual servicing cost–completely independently of a deep discussion of our city’s budget and our overall financial condition.

This is classic big spending that we have lived with on the commission for the last ten years.  This is indifference to the budget, taxes, spending, efficiency and everyday tax payers.

We still are a city that makes big financial decisions without having a multi-year financial plan, let alone a well analyzed annual budget.
Unfortunately, this action will almost certainly lead to unnecessary spending on low impact and low priority projects based on a “pile of money”  or “free money” effect of the expanded debt.  Once financed, you will have to spend the money, rather than following a more prudent approach of financing manageable packages of projects in shorter periods of time.
At no time did the city manager, mayor or commissioners mention that there is another financial alternative to increase debt to finance multi-million dollar projects, and that is to lower the costs of the debt payments to the city–this assumes we don’t need that money for other uses.  If we say that the money might go into operating costs, then they are admitting that you have no control over our budget.  This was rich–justify more debt and capital spending to help reduce operating expenses share in the budget.
Interest costs are only a small part of the costs of an investment program–more important are the unit costs of the projects, their relevancy, timing, cost escalation, these are the real costs.
(I was also wondering if the city’s financial advisors are receiving a commission base on the size of the package?)
It is very disappointing that this commission has not changed it ways, and again avoids wider community consultation and openness on important decisions.
This is a very surprising vote–I believe someone used the work “shocking”– given the serious financial questions that this city is facing.  The new mayor and most of the commissions (except for Mr. Cabrera) choose to ignore the city’s financial problems.

Filed under Coral Gables, Finance

Coral Gables’ Mayor Undercut by Term Limits

April 25, 2011 Leave a comment

I have a view of the job of mayor of Coral Gables–it’s not what it was worth with a four-year term.  Two commissioners, Kerdyk and Quesada, were elected for four years.   This means that the mayor will have the face the voters in two years and raise another $100,000, while the others will build a long-term agenda, pushing their pet projects along.

One vote does not a tax cut make-you need four votes to make really hard cuts.

The position of the mayor is a fragile, now more ceremonial than real, just one more vote.

Hence it will be quite hard for Mayor Cason to promote his own agenda given his knowledge of the city, the actual day-to-day authority of the city manager, and the countervailing powers of Kerdyk, Quesada and outgoing Cabrera and Anderson.

We all wish him luck, but don’t expect that much in his two-year term.  Two-year term limits looked great in another time–now they don’t so appear.

Filed under Coral Gables

A Little History of the Reagan Deficits

April 21, 2011 Leave a comment

There is usually a lot of talk about the budget deficits of the Reagan and first Bush years that the presidents were not to blame, but were caused by out of control congressional spending.  Wrong.  Fully 80% of the deficits in the Reagan/Bush periods were programmed and asked for by the Presidents, and the balance, 20%, came from the Congress.

The overwhelming proportion of the deficits of the last decade [i.e., the 1980s] were already proposed in President Reagan’s and President Bush’s original budget submission. There was no explosion of federal spending over and above what the presidents had asked for. More than four-fifths of the 1980s deficits were “presidential.” Less than one-fifth were “congressional.”

via Origins of the Reagan Deficits: Hoisted from the Archives – Brad DeLong’s Grasping Reality with a Prehensile Tail.

Filed under Finance, National

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