Debt Financing Concerns

After reviewing the Durham Citizens' Financial Report and the highlights of the Introduction lesson for Durham Neighborhood College, Durham certainly has many things to be proud of.  Durham is continually recognized by media outlets across the nation as one of the best places in the country to live.  Durham maintains a triple-A credit rating reflecting the generally responsible budgeting by the city.  However, there are some spots of concern.

 Of utmost concern is the frequent use of voter referendum to approve bond measures and tax increases.  Since 2005, there have been votes on bond measures in 2005, 2007, and 2010 totaling over $400 million.  There have also been numerous votes on tax increases including County Sales and Use Tax, Public Transportation Sales and Use Tax, and a Prepared Food Tax.  All of these except for the Prepared Food Tax passed.

Those individuals who have historically been the most engaged in local government are more than willing to continue to tax and spend without recognizing the economic consequences.  While debt financing of large capital expenditures is fairly routine, utilizing bonds to finance routine maintenance and repair of things like roads and parks is entirely unacceptable and reflects a failure of the local governments to budget appropriately.  Further, while financing large capital expenditures is routine, every effort should be made to move away from this habit, particularly as the economy recovers and interest rates increase.

Turnout in local elections is historically very low.  If we stand up together, we have the power to push our local government towards greater fiscal responsibility and put an end to the year after year increases in tax rates that have become all too common.

 

 

 


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