A.G. Gancarski
It’s rare that a Debt Affordabilty Study qualifies as a good-news story, but in the case of Jacksonville, most metrics are bullish.
Debt service costs and debt per capita are below targets, while reserve funds are trending toward their targets.
“Through recent strong financial management, as recognized by the ratings agencies, a strong economy, low interest rates, and a consistent trend in reducing our debt outstanding, these metrics have continued to improve,” the report from the city’s CFO, Mike Weinstein, asserts.
And they have needed to. As the report says a bit later on: “Jacksonville has a higher than average debt burden and a slightly below average level of reserves. As will be seen later on in this study, the City has been improving in both areas over the last five years. Continuing the trend of paying down debt and increasing reserves will be viewed favorably by the ratings agencies.”
Since Fiscal Year 2013 (during the Alvin Brown mayoralty, when the city dealt with the hardest hits of the recession), the city has paid off $354 million in outstanding debt, and has kept debt service at a consistent level. Though that debt service, a function of non-negotiable fixed costs, is described within the report as “tight,” with payments being 11 percent of each of the last two budgets, expectations are that it will become less of an impact as city revenues grow in the coming years.
“Jacksonville continues to enjoy strong budgetary flexibility to meet any future fiscal challenge,” the report maintains. “Jacksonville’s modest tax rates and average tax burden form the foundation for the City’s financial flexibility while maintaining its desired service levels. This revenue capacity and flexibility underpin the market’s positive view of the City’s debt.”
The city expects to retire $400 million of general fund debt between now and FY 2023, allowing for new borrowing, the report says.
Alas, there are caveats: “While the city’s debt burden is forecast to improve and otherwise create ability for new debt, it must be cautioned that other rising costs and demands on city resources may offset some or all of this benefit.”
The short term, however, holds promise. Reserve levels are expected to be above 14 percent (with emergency and operating combined) of the general fund in the next budget, boosted by $60 million from pension reform, per the report.
The Mayor’s Office had pushed to increase reserve levels a year ago, but there was little enthusiasm for the concept on the Finance Committee at the time.
The question going into FY 2018-19: Will this be an “election year” budget, or will the Mayor’s Office dole out the castor oil for incumbents and push for fiscal restraint as voters mull their fates?
