Real cost of $248 million street bond: $440 million
...In 2003 the City had just 2,918 employees earning over $90,000 in total pay, excluding fringe benefits, costing $314 million. In 2010, the City had 11,838 employees earning over $90,000, an increase of 8,920 such employees, who now cost $1.47 billion, an increase of $1.15 billion, by the stroke of the Mayor's pen signing the City budget, and a compliant Board of Supervisors passing Annual Salary Ordinance increases. Clearly, the unfunded salary increases exacerbate our unfunded pension problem, largely driven by overly-generous top salaries, which isn't being addressed in pension reform ballot measures, or discussed by City officials. Thank you Willie Brown and Gavin Newsom for our terrible roads and our abundance of highly-paid, managerial employees...
After years of deferred maintenance, the City comes crawling back to the voters with a $248 million Road Repaving and Street Safety Bond on the November ballot. This is what the road repair bond claims they will give us: We get to pay for our infrastructure repair for a second time by paying $148 million for street repaving and reconstruction; $7.3 million for street structure rehabilitation and seismic improvements; $22 million for sidewalk and accessibility improvements; $50 million for streetscape, pedestrian walkways, and bicycle lanes; and $20.3 million for upgraded traffic signals.
The actual cost of the bond will be $440,749,617, after adding $189,249,617 in interest payments over the next 24 years, plus $3.5 million in bond issuance charges. Just $155.3 million of the $440.8 million---only 35 percent---will actually be used for street repaving, reconstruction, and seismic improvements...
Labels: City Government
posted by Rob Anderson @ 9:46 AM
10 comments
10 Comments:
So what you are saying is we should let our roads fall apart.
No, moron. What I'm saying---what Wooding is saying---is that our oh so "progressive" city government has been feathering the nests of city employees and pissing away the taxpayers' money that should have been going for basic services, like paving city streets.
I'm saying that projects like the Central Subway were/are irresponsible given the city's and Muni's deficits. Our bus system is in the red, and we have to borrow money to pave our streets, paying $189 million in interest on top of the $248 million over the life of the bonds.
The bond money will be gone in a few years, and we'll be back where we started.
Central Subway is irresponsible - So you are saying you don't support transit.
The Central Subway is not a responsible "transit" project for SF; it's a political deal disguised as a transportation project. I'd rather see all that money---the city's share could be as much as $200 million---invested in Muni and/or paving city streets.
The analysis in the article referred to is pretty sloppy. There is a claimed amount of interest to be paid - but the bonds have not been sold yet. As such, the interest rate has not been fixed, and no interest calculation can be made.
Just for grins - I ran some amortization charts - the calculations done by Wooding assume an interest rate of 5 3/8%
Laughable. 30 year fixed mortgage rates are currently at under 4%. The 30 year T-bill is under 3%. There is no way the City would have to borrow at 5 3/8% given their Municipal status giving the bondholder tax free income status. I predict the auction would come out in the 3.75% range. That's just a prediction, but Wooding is calculating interest rates as fact, which is not honest.
Also, 40% of the bond measure is not for "fixing" things, it's for building new things. And while the other 60% includes "repaving", it also includes "reconstruction". Nobody would claim that the new Doyle Drive (not included in this measure of course) is "fixing potholes", it is "reconstruction" which is a capital expenditure, not maintainance.
For example, the money could be used to radically overhaul the Great Highway such that it no longer gets eaten up by sand several times per year - which screws up traffic a lot more than any of your hated bike lanes, by closing that major artery down completely. There will never be a chunk of money in the annual budget to do major capital projects, because the nature of projects like that is a couple of years of big bills, then the project is done. But tax revenue is supposed to be more constant in nature.
The time to do this is now. We can borrow money at historic lows and pay it back later with inflated dollars - sooner or later the inflation is coming, borrow now! With the economy in the dumper, the city should be able to negotiate good terms with contractors who need the work. Those workers will pay more taxes to the city because of their employment - in a down economy the difference between an unemployed worker and an employed worker in direct and indirect tax revenues would pay for the interest on the bonds.
You miss the point on that bond, which is that we shouldn't be borrowing money for operational expenses. The city already raises more than $180 million a year with parking meters, parking tickets, and parking lots. And another $70-80 million a year from Prop. K sales taxes. The city wouldn't even propose this bond if it wasn't pissing away a lot of that money on the Central Subway, and, as Wooding points out, on excessive salaries and benefits to city workers.
"You miss the point on that bond, which is that we shouldn't be borrowing money for operational expenses"
No I did not. You just didn't READ my post.
"Also, 40% of the bond measure is not for "fixing" things, it's for building new things. And while the other 60% includes "repaving", it also includes "reconstruction""
Why borrow money for anything but major projects? As I've shown, the city already raises more than $250 million a year from parking and Prop. K alone.
Why borrow money for anything but major projects?
Once again, you did not READ.
The time to do this is now. We can borrow money at historic lows and pay it back later with inflated dollars - sooner or later the inflation is coming, borrow now! With the economy in the dumper, the city should be able to negotiate good terms with contractors who need the work. Those workers will pay more taxes to the city because of their employment - in a down economy the difference between an unemployed worker and an employed worker in direct and indirect tax revenues would pay for the interest on the bonds.
Even making allowances for the reading disorders suffered by you bike people---possibly from diesel fumes and carbon monoxide---this is dumb. If not for City Hall's irresponsible handling of tax revenue, the city wouldn't have to borrow money for these projects.
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