I just wanted to clarify some things on the Minneapolis debt levels. This isn't a statement for or against any candidate. I just want to provide some facts so folks are arguing from the same place. First off, debt levels overall have increased over the last three years, not decreased. Debt levels overall (that is both general obligation and non-general obligation debt) have gone up about 5% from 2001 to 2004. (Don't know the difference? See the note* below.) More importantly, the level of general obligation debt has gone up about 11% over the last three years. The biggest category of decline in outstanding principle is in self-supporting bonds, about -18%. This isn't surprising because about 30% of the debt overall that the City had in 2001 was in one thing - the Convention Center. The Convention Center is being paid off by the various dedicated local sales taxes that are imposed in Minneapolis and this is pretty much on autopilot. The other biggest decline has been in non-GO MCDA economic development and mortgage bonds. This debt declined about 29%. This is in large part due to paying off of TIF bonds from previous TIF projects and not issuing more. Enterprise bond debt didn't change much, about 7%. Those are mostly bonds for sewer, water, and parking, although there is a little bit of money for the MCDA Home Ownership program. Internal service debt increased substantially, about 22%. This category increased due to increased debt for the Equipment Division and new debt for Property Services. This is also the category of funds that got the City into trouble and led to its loss of its AAA bond rating from one of the bond rating agencies. The biggest increase in debt both in total dollars and in percentages is the property tax supported debt. This is the debt that is paid for directly through property taxes. This category of debt increased about 270% over the last three years, or almost $200 million. This is primarily due to the addition of two large chunks of debt. First, is the library referendum, which in 2004 made up about $93 M in debt. The other was the pension obligation debt, which in 2004 made up about $118 M in debt. These two issues alone made up 15% of the City's overall debt in 2004, debt that didn't exist in 2001. The raw numbers: Purpose 2001 2004 Change Change Enterprise $381.3 $407.3 $26.0 7% Self-supporting $640.3 $522.4 -$117.9 -18% Internal service $83.3 $101.2 $17.9 22% Property-tax $69.4 $268.1 $198.8 287% Subtotal G.O. $1,174.2 $1,299.0 $124.8 11% Non-GO $206.5 $146.1 -$60.4 -29% Total Debt $1,380.6 $1,445.0 $64.4 5% Want to read more? http://www.ci.minneapolis.mn.us/financial-reports/special-reports/outstanding-debt1996-2004.pdf Carol Becker Longfellow Candidate for the Board of Estimate and Taxation *What is general obligation debt? General obligation or GO debt is when government borrows money and pledges to raise taxes to pay for the bonds if the main revenue source is not adequate. For example, the City wants to improve the water treatment plant. So it borrows money to do so. It promises to use water fees to pay back the borrowed money. But if for some reason water fees drop and they are no longer adequate to pay back the money borrowed, the City will use property taxes to pay off the bonds. There are also non-GO bonds. These would be if the City borrowed money and promised to pay it back with water revenues but did not promise to pay with property taxes if the water revenues faltered. These non-GO bonds typically have higher interest rates to compensate the investors for the higher risk. Because of this, it is typical to make a promise to use general taxes even when you are extremely certain that your main revenue source is adequate to pay off the bonds just to get the lower interest rate. REMINDERS: 1. Be civil! Please read the NEW RULES at http://www.e-democracy.org/rules. If you think a member is in violation, contact the list manager at [EMAIL PROTECTED] before continuing it on the list.
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