Commentary by Christine S. Pauley
As the City of Carmel chief fiscal officer and a resident, I am disheartened with the downgrade of the city’s credit rating due to the city’s rapidly increasing debt burden of $300 million over two years with additional debt issuances looming.
This is about setting spending priorities. S&P was told of future city spending, including a $30 million bond for city hall renovations/repairs, expansion of our police station to include secure prisoner areas and locating the City Court to a separate, secure structure adjacent to the police station. However a boutique hotel and other projects were bonded first, putting the city at its credit limit. The city received a shot across the bow on Oct. 31 with S&P’s rating on the LIT supported debt, warning the city to add more debt may lower its rating.
I personally prescribe to a no or low debt policy with adequate savings set aside for emergencies.
Therefore, I disagree with the mayor’s statement that S&P’s request that the city maintain reserves sufficient to cover debt service payments as “hording” taxpayer money. Our rainy day reserve fund has not been replenished to reflect the mounting debt incurred over the last two years. It makes sense to me to have adequate savings set aside should the city incur an unexpected financial turn of events.
The mayor cites blame for the downgrade on three disgruntled prior city council members, but had the debt service payments been properly budgeted, there would have been no need to ask the City Council at years’ end for a transfer of money. And let us not forget, the mayor’s request would have been approved had one of the mayor’s strongest ally, Ron Carter, been present at the council meeting that resulted in a defeat by a split 3-3 decision.
It is time to stop the political blame game by taking an honest, fiscally responsible assessment of the city’s debt against spending priorities and finally acknowledging S&P’s outstanding work in assisting the city to remain financially strong until 2035, when the last bond payment is made.
As my MSU economics professor once stated, “There is no such thing as a free lunch.”
Christine S. Pauley is clerk treasurer of the City of Carmel and executive director of the Carmel Local Public Improvement Bond Bank. She can be reached at [email protected] or 317-571-2414.
