Stoney says city’s ability to borrow is ‘effectively maxed out’

Photo by Sarah King
Mayor Levar Stoney addresses reporters at City Hall after officially winning the November 2016 election. Photo by Sarah King.

As folks begin clearing out attics, reorganizing kitchens and hoisting battered sofas to the curb in the time-honored tradition of spring cleaning, Richmond’s new mayor is hoping to do something similar inside City Hall.

Mayor Levar Stoney submitted a budget proposal earlier this month with policy goals that range from improving bulk trash pickup services and alley repair, to renovating fire stations and repairing aging utility infrastructure. The proposal also seeks to clean up the city’s finances and includes a list of best practices for increasing departmental accountability, raising tax collection rates and pinpointing new sources of revenue.

“This budget continues to invest in the path to becoming a Triple-A bond rated city,” Stoney said in a letter to City Council, which is now tasked with debating and amending the budget ahead of a May vote.

Achieving a Triple-A bond rating, the highest attainable credit rating, would lower costs to borrow money and increase funds available for capital investment, or projects requiring the expenditure of public funds for the purchase, construction, enhancement or replacement of physical infrastructure/assets.

In his address to City Council, Stoney said upgrading the city’s bond rating would be an important step in addressing the spending excesses of the previous administration. On the campaign trail, Stoney frequently criticized then-Mayor Dwight Jones for investing heavily in large economic development projects at the expense of core services.

“Because our outstanding debt has doubled over the previous eight years to more than $800-million, our credit limit– our ability to borrow– is effectively maxed out,” Stoney said.

In February,  Stoney made a visit to the New York office of Fitch Ratings, one of three nationally– recognized credit rating agencies for municipal governments. Last month, Fitch reaffirmed Richmond’s AA+ rating– just one notch below the Triple-A bond rating  for the previous fiscal year.

“Our attention to key financial best practices and growth in economic development proved to be key drivers in Fitch’s analysis,” said Selena Cuffee-Glenn, Richmond’s Chief Administrative Officer.

Stoney’s renewal emphasis on best practices and other, short-term solutions, such as raising utility rates and making “significant cuts” to many departments and non-governmental programs, are efforts to solve the city’s financial woes.

To combat this, the city may offer a tax amnesty period where residents who owe taxes to the city could pay without facing additional fees and interest– a policy the city’s Finance Department expects would generate an additional $2.4 million.

Stoney administration spokesman Jim Nolan cited effective implementations of such a policy in Portland, Akron and Philadelphia  municipal governments, as well as by the states of Ohio, Texas and New Jersey.

The budget also aims to increase the city’s real estate tax collection rate from 96 to 97 percent in the coming year, which will increase revenue by another $2.4 million.

Additionally, the proposed creation of two new internal service funds are intended to force the Department of Public Utilities to pay for their fair share of the costs of information technology and risk management. According to Nolan, the costs have, until now, largely fallen on the city’s taxpayers.

In the event these measures result in the envisioned rating upgrade, Nolan pinpointed a number of priorities for the subsequent increase in funds available for capital investment projects, including maintenance and renovation of public schools.

“Over the last 10 years, there has also been deferred investment on important infrastructure needs such as repairs to our bridges and roads, improvements to our fire and police facilities and replenishing our depleted fleet of trucks and vehicles,” Nolan said. “Available capital would help us address these long-neglected challenges.”

An important aspect  of  implementing these policies, and locating further areas in need of reform, is the city’s auditing process, which has recently been central to a very public dispute between Stoney’s finance director, John Wack, and City Auditor Umesh Dalal.

During a City Council meeting last month, Wack rejected Dalal’s requests for information on tax collection, insisting that a financial audit was unnecessary. The altercation prompted the Stoney administration to intervene, stating firmly that the mayor would work with Council President Chris Hilbert to develop a process in which outstanding taxes owed to the city would be paid back.

But the audit isn’t the only area where the mayor’s administration is drawing fire as the budget proposal works its way through City Council.

The mayor’s push to reinvest in core services, in addition to bulk trash pickup, grass-cutting, and alley repair, also includes a switch from yearly to biweekly brush collection, and offsets the associated cost by raising utility rates and forcing citizens to bag their own leaves.

Peggy Holt, resident of the leafy Stratford Hills neighborhood, told NBC12 the new policy would hurt elderly folks like herself, who are currently able to simply blow leaves to the curb for collection by vacuum-enabled trucks.

“I’m 70 years old, and now I have to bag up all these leaves so the city can do their job,” Holt said.


Jim Thomma | News | thommaj@commonwealthtimes.org

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