In response to a mayoral candidate’s column (“Commentary raised more questions concerning finances,” The Daily News, Feb. 28), I am compelled to tell him and everyone why, contrary to his claims, the city of Galveston truly is strong financially.
I’ll stick to financial facts and leave it to others to refute the candidate’s clearly misleading comparisons of our city employees’ pensions and his baseless insinuations about ethics and practices by city council and staff.
First, Galveston has $241 million in debt. Our peer cities, which the city uses for market comparisons before making financial decisions, average $386 million in debt. In fact, only Texas City and Pasadena have less total debt than Galveston among 10 peer cities.
Galveston’s property taxes are in line with the average among our peers. But only 5.1 percent of those revenues are dedicated to bond debt, the lowest among the 10 peer cities. The bonds issues are paying for our capital improvement plan, financing the many street, sewer, water and drainage projects going on across the island — projects neglected for decades. This city council and staff are finally doing this vital work instead of delaying, deferring or dismissing it, as in the past.
Second, this debt was undertaken only after careful deliberation, particularly about cost. We all know that, as infrastructure ages, replacement costs go up. So completing these projects likely will never be cheaper than now. With interest rates as low as ever, this council and staff acted prudently in issuing bonds. The timing was right, as investors paid a premium to loan us the money for needed projects.
Third, bond financing was the most efficient way to fund major projects. It enabled the council and staff to launch many urgently needed projects quickly. Trying to save cash for each project (pay as you go) would take many years, infrastructure would continue to crumble and costs would rise. Interest rates on Galveston debt are at record lows.
Fourth, the city’s three pension plans are administered and controlled by elected members and appointed trustees — not the mayor or city staff. This city council targeted pension reform and its efforts led to greater sustainability, the terms agreed to by all sides. If fund forecasts prove out, unfunded liabilities finally will decrease. In prior administrations, including 1998 to 2004, unfunded liabilities of each pension increased annually.
Fifth, when city council paid $13.5 million to settle a $20+ million lawsuit, council and staff didn’t discuss increasing taxes to pay it. Regarding spending tax dollars, current municipal accounting and transparency standards are very specific. The recent modest tax increase covers negotiated pension fund contribution increases and better city employee health insurance.
I agree with Assistant City Manager Mike Loftin’s statement that the City of Galveston’s financial condition is strong. If a mayoral candidate or anyone else doubts it, I refer them to Moody’s Investors Services or Fitch Ratings Inc., both of which gave the city strong credit ratings — an AA rating, which is the second highest rating category and reflects prudent financial management and low debt burden. Let’s keep moving Galveston forward!