Editor’s note: This letter from Alderman Dennis Smith is in response to Mayor Rob Mielke’s Nov. 20, 2017 letter to the editor regarding the city’s debt and credit rating.
I have now had the opportunity to read the mayor’s letter to you and I can say that I fully agree with some of the comments it contains.
The downgrading of the city’s overall credit rating is not the end of the world. Many cities have their credit rating fluctuate over a period of time. On the other hand, having your credit rating downgraded by a respected organization like Moody’s Investors Service in not something you want to take home and hang on your refrigerator, as it may be a harbinger of the bad things to come.
I also agree that the revenue bonds were rated higher than expected, but there is a reason for this that was not detailed in the mayor’s letter. That reason being that revenue bonds are not backed by the city’s ability to pay them with tax money. Revenue bonds are paid for by the revenue produced by a city’s department. Thus, the name Revenue bonds. Wausau is blessed with a very efficient and well managed water and sewer department that produces more than adequate revenue to pay the debt created by the bond issue. Therefore, I supported both measures concerning the revenue bonds.
I also agree with the mayor when it comes to transparency on such matters. All debt issues are discussed in the light of day with no backroom deals being cut away from the public’s eye. However, just because something is done in the public’s eye does not necessarily mean it is the right thing to do.
Now my concerns.
No doubt the recent downgrade of the city’s credit worthiness by Moody’s Investors Service is a warning sign that should be acknowledged by the city. This downgrading could not only impact the interest rate we pay for future borrowing or possibly the city’s ability borrow at all. And while we are not standing at the edge of the precipice of financial ruin, we have taken one step closer to that edge.
For some time now, I have been concerned about the city’s ever-growing debt load. That is why I have voted NO on several measures that have increased the city’s debt obligation. What we are doing is simply not sustainable in the long run, and eventually we will pay the price for our actions. I feel that we cannot continue to mortgage the present in hopes that we will have a big payday at some point in the future.
It is understandable that the city should collaborate with local businesses to help grow jobs and our tax base. However, in my opinion, there are times that the city has given much more than it has received in return. Many times, the city has obligated millions of taxpayer dollars for projects that will produce very few jobs over an extended period of time. The argument could be made that many of our other local businesses, who have not received any money or assistance from the city, will likely create just as many jobs on their own over that same period.
In all fairness, most projects will have an increased assessed value and will pay higher property taxes at some point in the future. But, one must keep in mind that many of these projects are in TID districts and most of the taxes generated in those districts must be kept within those districts to service the debt and for other improvements with that TID district which, by the way, can exist for decades. So, the general fund, the fund that runs the city’s operations, goes without that money.
Keep in mind that the mayor does not have the ability to borrow on his own accord. Any debt accumulated by the city must have the approval of the full city council. So those citizens who question the city’s current course of action should direct their concerns to their local councilperson.
In closing I believe that acquiring debt on behalf of the city is an critical responsibility for all the members of the city council. Making sure that we acquire this debt in a prudent and cautious, and sustainable manner is even more critical .
Dennis R. Smith
Alderman, 11th District
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