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Balancing the budget
By AMY WIMMER, Times Staff Writer
When it comes to managing money, municipal budgets aren't unlike household budgets. Save or spend? Pay cash or borrow? Plan ahead or try to keep up? The main difference: When the budget gets tight, cities and towns can raise taxes to generate more income. Different municipalities' policies about when going into debt is prudent are as varied as the opinions about financial planning. While some communities have self-enforced rules that prescribe how they do business, others save those discussions for the few months each year when they plan the budget. John Robertson, the mayor of Belleair Shore, said his town's charter dictates that it can't go into debt. Gulfport is one city that has made a policy of staying debt-free. Bob Lee, the city manager in Gulfport, which has secured more than $1-million in grants each year for about the past 10 years, said its policy is to create a realistic plan that charts the projects Gulfport wants to complete within six years, then work incrementally to reach the goals. Some communities think a "renaissance" has to happen overnight, Lee said. "I think one of the keys is patience," Lee said. "Sometimes we get impatient about things. We want to do it right now." Gulfport built a new City Hall eight years ago without borrowing money. In just the past three years, it has refurbished the historic Gulfport Casino, built the new Hickman Theater and remodeled the Gulfport Recreation Center, all with cash. Sometimes communities want their residents to benefit from a new project now, rather than waiting several years. In Seminole, voters agreed to borrow money for a new recreation complex, which opened last year, 14 years before the city pays off the debt. Seminole still owes $6.89-million on the building. Madeira Beach, another debt-free city, has big plans for its future now that it has drafted a master plan. So far, city commissioners have found room in the budget to pay for its projects with cash, but City Manager Jim Madden said some municipal priorities shouldn't be delayed. "Philosophically, you have to look at each project individually," Madden said. "If we had a severe drainage problem, you'd want to go ahead and take care of that as quickly as possible for the health and safety of residents and people who enjoy the community." On the other end of the spectrum, Pinellas Park owes $42.3-million, mostly on utility projects such as sewer lines and a reclaimed water system. The money also went for improving streets and drainage. Some of the bond issues the city is paying on have a history dating to 1985. "The 1985 bonds, what happens is you take the money, put that into securities that over a period of time will pay off that debt," said Dick Wheaton, Pinellas Park's finance administrator. "In a way, yes, we're still paying for those, but the money's been put away for it." Pinellas Park plans to pay off $6.95-million of its debt this year. The city now carries more debt per resident than any of the south Pinellas and gulf beaches communities reviewed by the Times, but St. Pete Beach will take that spot after Pinellas Park makes its multimillion dollar payment before the end of the year. About half of St. Pete Beach's debt comes from installing reclaimed water, the largest single expenditure the city has ever made. The bulk of the rest comes from two major construction projects: a new police station, completed in 1995, and a new City Hall, which opened in April. Both projects helped clear the way for the city to tear down the old City Hall on a site that will become a new waterfront park. The city has not yet found money to pay for improvements to the site, which is now vacant except for the city gymnasium. But critics wonder whether St. Pete Beach's lack of a long-term plan prevented the city from establishing an image with its new buildings. While the new City Hall has a stately Mediterranean look, the police station across the street is more modernist, with a Technicolor interior visible from the outside. St. Pete Beach also owes money on several vehicles and even the parking pay stations that beachgoers use to pay to park. The city leases those items. Mike Bonfield, who became city manager in St. Pete Beach in January, said he doesn't believe the city is carrying too much debt, but he would like to move toward paying cash for more items. This year, St. Pete Beach will dip into its reserves to balance the budget for the third consecutive year. While leasing vehicles makes the budget look more balanced for a few years, Bonfield explained, such decisions will eventually catch up to the city. "You get away with that for a few years, and then all of a sudden you find yourself in a position where it's no longer a stopgap," Bonfield said. "It's a routine." South Pasadena budgeted to pay off a $105,000 lease on a combination fire engine/rescue truck this fiscal year. That leaves the city with one debt: $1.27-million for its reclaimed water system. Getting out of the lease became especially important because of the low interest rates municipalities are now earning on their investments. "When you're earning less than 2 percent on some of your accounts," said the finance director, Jim Graham, "to pay five and six percent in interest doesn't make a lot of sense." Debt-free communities are burdened by the low interest rates, too. But those cities aren't as dependent on investments to pay the bills. "Just like if you buy with a credit card," said Lee, the Gulfport city manager. "We all know it's a lot easier to buy it, but someone has to pay the bill."
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