Reason TV and Prop 104: Phoenix Light Rail Fail

Meet the Thighmaster of urban public policy: Streetcars.

Municipal politicians all across the country have convinced themselves that this costly, clunky hardware can revitalize their flabby downtown economies.

That includes the fearless leaders of America’s capital city. The DC government has spent hundreds of millions of dollars over the last decade trying to erect a streetcar line in the up-and-coming neighborhood of H Street. The project has been an epic disaster, perfectly demonstrating how ill-suited streetcars are to modern urban life.

Video Produced by Rob Montz, who also hosts. Camera by Todd Krainin. Graphics by Jason Keisling and Meredith Bragg.

Thanks to ReasonTV.

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Facts about Phoenix Prop 104:

  • $31.5 BILLION Proposal
  • Tax will last 35 YEARS
  • $6.66 BILLION for Light Rail
  • 41.2 Miles of new rail
  • $161 MILLION per mile of light rail
  • Entire proposal could purchase 2.2 MILLION SmartCars
  • Will shrink available funds that could be used for education, hiring or teachers
  • Mayor and Council created a $10,000 exemption to appease big business from paying full tax rate
  • Majority of Pro-Prop 104 money is from construction and developers who will benefit from contracts to build light rail corridors.
  • Current light rail is losing 53% on farebox recovery
  • Valley Metro places emphasis on increasing ridership by backing off and not enforcing payment
  • Less than 1% of Phoenix population rides light rail
  • Vast majority of riders are students, government employees, homeless, destitute or under the influence (subsidized or non-paying riders).

Poll: Glendale Voters Torn Over Arizona Coyotes

Some Voters Believe Losing the NHL Franchise Will Have a Negative Impact on the City – Others Lean Toward Financial Responsibility

(Phoenix, AZ) — MBQF, a public opinion survey consulting firm, announced today the results of a recent public opinion survey conducted on June 10, 2015.  Results from the automated survey show likely Glendale City voters with 81.2% awareness of this issue. Glendale voters initially view the loss of the Arizona Coyotes as having a negative impact on the city.  However, when voters were asked to make a judgment call, they chose their wallets over a handshake.

When asked if the agreement made two years ago with the Arizona Coyotes should be honored, a majority of respondents said that, if given the opportunity, they would try to find a way out of the agreement.

The Question was read as follows:

The Arizona Coyotes spokesman says that they are in complete compliance with the contract with the City of Glendale. The City of Glendale is considering terminating the contract on a technicality because hosting the hockey team is costing the City of Glendale in the last two years 12 million dollars.  In this situation would you honor your agreement or would you find a way to get out of the agreement? 

Press 1 if you would honor your agreement     42%

Press 2 if you would try to find a way out of the agreement    58%

MBQF Principal Mike Noble concluded, “Based on the results of this survey, the Council’s actions were a direct reflection of what the likely Glendale voter would do if placed in that situation. You cannot fault the Council for its financially prudent decision to terminate the contract.  However, it begs the question– What does a handshake mean in Glendale?”

For more information about this survey, or a summary of topline data and wording, please contact MBQF Consulting.

Methodology: This automated survey was completed by MBQF Consulting on June 10, 2015, from a sample of likely voters who reside in the City of Glendale. The sample size was 443 completed surveys, with a MoE of ± 4.63

Follow @MBQF_AZ on Twitter for breaking polling news.

Sal DiCiccio: Phoenix Light Rail Will Take Money Away From Education

Recently, I appeared in an interview by the Legal Broadcast Network in which I discuss the Phoenix light rail fiasco. I’d like to share a portion of that interview so Phoenicians can understand what’s at stake in the August election and the enormity of this boondoggle.

The cost to build one mile of freeway is about $56 Million. Compare that to the cost to build one mile of light rail. As staff revealed, Phoenix taxpayers would spend $161 MILLION per mile for this monstrosity. That is almost three times the cost to move far fewer people than what a freeway moves.

And if you look at the number of users who actually use light rail, it’s about one half of one percent of our population. Putting that in perspective, its equivalent to the amount of people who drive down the street in front of your home.

For this $31.5 BILLION proposal, the City of Phoenix could buy 2.2 Million Smart Cars! That is every man, woman and child who could use one of these eco-friendly cars.

Remember, the same people who brought us the downtown Sheraton Hotel at a total loss of $130 Million, now want us to pay for another massive taxpayer $31.5 BILLION boondoggle.

At a time when we need more money going into our education system this takes money away from that priority. Every dollar going into this $161 Million/mile train system is a dollar not going to our children’s education.

Taken for a Ride – No on Prop 104

Taken for a Ride - NO on 104
Committee to educate public on $31,500,000,000 Phoenix Transportation Plan
(Phoenix, AZ) — Today, the Taken for a Ride – No on Prop 104 committee publicly announced its formation to oppose the $31,500,000,000 sales tax (Transaction Privilege Tax) that will be put before voters on August 25, 2015.  The sales tax, which was approved to go before voters by Mayor Greg Stanton and several city council members, is calculated to give Phoenix, Arizona one of the highest sales tax rates in the United States.

Explaining why he is chairing the “No” committee, United States Army Veteran Matthew Kenney said, “When I returned from the battlefields in the Middle East, my hometown of Phoenix led the country in kidnapping and poverty.”  Kenney said he was staggered to learn, “At a time when my commute times are below the national average, Phoenix’s murder, robbery, assault and overall crime rates were on the rise (latest 2012 statistics).  Phoenix leaders have lost their focus – it’s about badges not buses — they are getting it wrong.”

Once touted as one of the “best-run” cities in the country, Phoenix, Arizona has seen a troubling decline since the new Mayor was sworn in, in 2011.   In discussing Phoenix’s rapid decline, Taken for a Ride Consultant, Mike Noble said,  “Phoenix was most recently a city in the black and now finds itself trying to tax itself out of the red. No society in the history of the world has taxed itself into prosperity regardless of the types of jobs you intend to create.”

In what many are calling a generational tax, Proposition 104’s language is very unclear according to election observers and legal scholars who are considering challenges.  Mike Noble said, “Hiding $31 Billion from taxpayers reminds me of underhanded politics– Politician’s generally rue the day that they try to slip one by the taxpayers.”

Matthew Kenny added, “Phoenicians and small business owners will have to shoulder a 31.5 billion dollar tax burden and the mayor cut a deal with big business excluding purchases above $10,000 from the proposed new tax, where is my deal Mr. Mayor?”
Chairman, Matthew Kenney concluded, “31 billion dollars will buy every man, woman and child living in Phoenix Arizona today, a smart car…. Out of the goodness of Phoenix taxpayer’s hearts, we could also purchase a smart car for every man woman and child who lives in Tucson Arizona.  This is just bad policy, we should vote no on Prop 104.”

Matthew Kenney served 6 years as an infantry officer in the United States Army and fought in Operation Iraqi Freedom and Operation New Dawn.  Matthew resides in Phoenix, is married to his lovely wife, Brittany, father to his daughter Eden and they expecting one more addition to the family in several months.

Costs and Tax Increase are a Train Wreck for Phoenix Transportation Plan

MBQF

Sticker Shock Drives Phoenicians Opinions Over Proposed Light Rail Expansion – Voters Favor Other Public Priorities

(Phoenix, AZ) — MBQF, a public opinion survey consulting firm, announced today the results of a recent public opinion survey conducted on March 5, 2015.  Although the results from the automated telephonic survey show likely Phoenix City voters give initial grudging support toward a light rail and transportation expansion plan – Phoenix voters quickly reverse course once educated about the potential costs and a tax increase.  Voters appear to remain skeptical over light rail for other priorities.

In the most recent automated telephonic survey of 580 likely Phoenix City voters, the survey calculates a 4.04% theoretical margin of error, plus or minus in percentage points, 95% of the time.  54.4% of respondents were women while 45.6% were men.

Almost two-thirds of respondents believe their tax-money should be prioritized elsewhere when asked,  “NOW, do you feel the city of Phoenix should prioritize transportation and spend $33 Billion dollars over the next 35 years that includes a proposed light rail expansion or do you believe the $33 billion dollars could be best spent in other areas such as education, public safety, police and fire, and health and disability services.”

Press 1 if you believe that the light rail and transportation is the best investment    34.83%

Press 2 if you believe that the money would be best used for other public needs      65.17%

Michael Noble concluded, “When 2/3 of voters agree on a spending issue, policy makers ought to take heed.  They are the type of numbers that are usually followed by a voter initiative.”
For more information about this survey, or a summary of topline data and wording, please contact MBQF Consulting. The margin of error for this survey is +/-4.04%.

Script

Hello, we are doing a brief survey on current issues within the City of Phoenix.  Some elected officials are considering spending tax dollars on transportation and we would like to ask your thoughts on these important issues.  Your name was selected at random and your responses are completely confidential.

1. Are you aware that the City of Phoenix has proposed spending $33 billion dollars over the next 35 years to triple the ridership of the current light rail and expand the transportation system?

Press 1 if you are aware     71.9%
Press 2 if you have never heard of it      22.24%
Press 3 if you are unsure    5.86%

2. Supporters of this potential light rail expansion argue that the plan would also expand bus services and improve or fix the city’s aging street system. Do you agree or disagree with these priorities?

Press 1 if you agree        53.79%
Press 2 if you disagree    46.21%

3. Are you aware that if the proposed light rail transportation expansion is approved it would increase Phoenix sales taxes by 15% and cost $161 Million per mile to build and operate? Would this information make you more likely or less likely to support the transportation expansion?

Press 1 for More Likely                  26.72%
Press 2 for Less Likely                   63.45%
Press 3 if it makes no difference     9.83%

4. NOW, do you feel the city of Phoenix should prioritize transportation and spend $33 Billion dollars over the next 35 years that includes a proposed light rail expansion or do you believe the $33 billion dollars could be best spent in other areas such as education, public safety, police and fire, and health and disability services.

Press 1 if you believe that the light rail and transportation is the best investment    34.83%
Press 2 if you believe that the money would be best used for other public needs    65.17%

5. If you were running the City of Phoenix, please tell me what you personally believe is the most important public priority as a taxpayer.   Would you invest tax dollars in Public Safety, Education, Disability services, expansion of the light rail or improvement of freeways/roads?

Press 1 for Public Safety   18.97%
Press 2 for Education        33.97%
Press 3 for Disability services   4.14%
Press 4 for expansion of the light rail    13.28%
Press 5 for repairing and improving current freeways and roads    19.48%
Press 6 if you are unsure   10.17%

6.  Leading the charge for the light rail transportation expansion is current Phoenix Mayor Greg Stanton, while the primary opponent of the light rail transportation expansion is Phoenix City Councilman Sal DiCiccio. Based on this, whose leadership do you most trust with your tax money?

Press 1 for Greg Stanton      35.17%
Press 2 for Sal DiCiccio        37.59%
Press 3 if you have no opinion at this time      27.24%

7.  Press 1 if you are Male          45.6%
Press 2 if you are Female      54.4%

Thank you for your time.

Mesa Activist: Vote NO on all Mesa Bond Issues

Longtime City of Mesa activist and watchdog Gene Dufoe presented this excellent case why Mesa voters should vote NO on all the City of Mesa bond issues. It’s lengthy but well worth the read to become informed.

On Monday, Oct. 5, I spoke at the City of Mesa Council meeting for 3-minutes on why $580,000,000 Utility Revenue Bonds should not be approved at the election on November 4.  The earlier article, as well as this article, are available on the http://votesmartmesa.com/ website.  The earlier article also appeared in the Gilbert Watch on August 22, 2014.  The complete update follows:

A look at why the concentration on the City of Mesa’s Utility Bonds, we need to look at the City of Mesa Budget: FY2014-15 Auditor General Schedules A-G: Schedule A Summary of Estimated Revenues and Expenditures to find why. http://www.mesaaz.gov/budget/ Documents/FY_14_15/Schedule% 20A_Summary%20of%20Estimated% 20Revenues%20&%20Expenditures. pdf

Looking at Interfund Transfers In (Out), we discover Transfers (OUT) of $(173,606,136) for the ENTERPRISE FUND and Transfers (IN) of $85,429,615 to the GENERAL FUND AND $92,164,059 to the DEBT SERVICE FUNDS.  The ENTERPRISE FUND is the business portion of the City of Mesa operations, i.e., the various utility operations run by the city.  This withdrawal from the ENTERPRISE FUND is taking more than $173 million of the current profits of the various utility funds and using it mostly for the current operations of the GENERAL FUND and the DEBT SERVICE FUNDS.  Note that the Property Tax Revenues of $33,440,000 also boosts the DEBT SERVICE FUNDS.  The result is the City of Mesa is taking current funds from the Enterprise Fund to spend immediately.  They are not using that money to responsibly maintain the infrastructure required by Enterprise Fund operations.  Instead, they are asking the residents of Mesa to mortgage our future (and also having our children and grandchildren) to make many of these needed infrastructure improvements with revenue bonds that will last through the year 2044.

The earlier paper discusses how the Utility Revenue Bonds are paid from the revenues i.e., the monthly water, waste water, electric, natural gas, and solid waste (garbage) utility bills, so they do not effect the direct tax burden.  However, paying utility bills comes out of the same pocket as paying any other bill.  This year’s City of Mesa rate increases on July 1, 2014, over the prior year are as follows:

•  Electric rates increased by 2%,
•  Natural Gas rates increased by 3%,
•  Water rates increased by 7%,
•  Wastewater rates increased by 7%, and
•  Solid Waste rates increased by 6.9%.

The Secondary Property Tax also increased from $22,105,000 last year to $33,440,000 this fiscal year.  That is an average 51% increase per household.

The only other City of Mesa Interfund Transfers (OUT) is $(7,038,653) from the IMPACT FEE FUNDS and the only other Transfers (IN) is $3,051,115 to RESTRICTED FUNDS.  Impact fees are assessed for new construction and are intended to go toward building the infrastructure for that new construction; however, the City Council has voted to use impact fees to bolster the General Fund and satisfy Debt Service.

According to Ryan Wimmer of the Mesa’s Office of Management and Budget, on July 1, 2014, the authorized, but not yet sold, bonds total $219,668,000 of which $72,213,000 are Utility Revenue Bonds.  A total of $580,000,000 is on the November 4, 2014, ballot is divided as follows:

•  Water System Revenue Bonds-$315,700,000;
•  Wastewater System Revenue Bonds- $178,200,000;
•  Electrical System Revenue Bonds-$27,000,000; and
•  Gas System Revenue Bonds-$59,100,000.

The bonds shall be payable solely from the revenues of the City’s utility systems, bear interest not exceeding 10% per annum and pay principal over not more than 30 years from the date issued.  The last utility revenue bonds, Series 2014, were for only 24 years.  If these utility revenue bonds are funded in the same manner as those previously authorized and sold, these bonds will be repaid over the coming years with interest-only payments for the most of the years of the bonds with the principal be paid in the last year or two of the bond life.  This will mean that the total interest repaid will be significantly more than the initial bond principal.  All of this when the Enterprise Fund is currently making a profit of more than $173 million annually.

From the “Moody’s assigns Aa2 rating to City of Mesa, Arizona’s Utility Systems Revenue Bonds, Series 2011” dated 13 May 2011, the following is quoted, “In fiscal 2010, $84.4 million was transferred from the Utility (Enterprise) Fund to the General Fund revenues.  Near term transfer amounts are forecasted to remain stable at $83.6 million.”  However, that did not happen as will be discussed in the next paragraph.  Since that time:

The Secondary Property Tax has increased from $14.1 million in FY10/11 to over $33 million in FY2014/15,

The Enterprise Fund transfer to the General Fund and Debt Service has increased from $83.6 million to over $173 million in the current year,

The stated bond indebtedness has increased from $1,354,816,963 on July 1, 2011, to $1,710,800,000

That is an increase of nearly $356 million in debt in three years.  And the City of Mesa, still has $219,668,000 of taxpayer-approved bond authorization, not yet sold, and now the City of Mesa is requesting approval for an additional $580,000,000 in Utility Revenue Bonds.  If the four  Revenue Utility Bond issues pass and considering the already approved bonds, not yet sold, that will be an addition to the current debt of nearly an additional $800 million.

In summary, since July 1, 2011, the debt of the City of Mesa has ballooned from nearly $1,356 Million ($1.356 Billion) to nearly $1,932 Million ($1.932 Billion) and we are being asked to approve $580 Million in new revenue bonds for a total indebtedness of 2,512 million ($2.512 Billion) or nearly double that we owed in July 2011.

Not only will that be an a major increase of the debt, but combining the lengthening of the bond life with the current City of Mesa approach to the repaying of Utility Revenue Bonds with interest-only payments for the first twenty-nine or thirty years and then paying the BALLOON principal payment(s) in the last year or two of the now 30-year bonds, the utility rates will continue to dramatically increase.  Note that the life of the Revenue Utility Bonds have increased from 18 years in 2009 to 24 years in 2014 and now 30 years for the new bonds to be voted on in November 3, 2014.

In a economy growing better than three years ago, the City Council is not properly protecting the interests of the City of Mesa residents.  Now, the City Council and Mayor Giles, as the newly-elected mayor, needs a wakeup call.  Note that Mayor Giles, earlier served in the City of Mesa City Council from 1996 to 2000.

We strongly urge a NO VOTE on all four of the bond issues.  It is time for the City of Mesa to cut all but the absolutely essential services and for repayment schedules to be part of any future bond authorizations and get back to pay-as-we-go management.  We need to pay for the City’s needs without drastically increasing taxes or utilities.

Gene Dufoe, interested citizen of Mesa

Mr. Dufoe is a retired Boeing engineer/manager who possesses the following degrees:  BSAE, MSAE, and an MBA with an emphasis in Finance.

Sal DiCiccio: How You Got Duped

SalDiCiccio

Vote YES 487/Stop Pension Abuse 

How (fire/police death and disability claims) became the most important issue in the 487 campaign-and how it’s not true. 

I am writing to show you how you were manipulated by the politicians (mayor & council), the opponents of pension reform and by the media covering this important issue. And, mostly because you need this information before you vote.

The issue of death/disability benefits being cut off are just not true and the media knew this was not true when they wrote their stories.

Here is the technique used to dupe you:

History and Technique

During my re-election campaign the unions filed a lawsuit in court against me, they then got the Media to write about the lawsuit. The unions then did mailers and TV to the public on the their lawsuit using the articles in the newspaper as the foundation.  Yes, the unions file their own lawsuit, get the media to write about it, then use the stories written in the paper in mailers and on TV. Even though the judge quickly threw out the case, the stories were written and used as fact in subsequent mailers and on TV.

Fast forward to The Pension reform (487) campaign:

The unions get their friends on the council to change the wording on the ballot description to add the words “Police Officer and Firefighter,” they then create the death and disability connection, then they get the media to write about it and create a story, then they do mailers and TV based on the confusion that they created using the published stories as the foundation. The unions rig the ballot description, get the media to write about it, then use the stories written in the paper in mailers and TV. The media knew this was not true.

The media can claim ignorance the first time, but a second time?

Hats off to the anti-pension reform campaign for being able to successfully use the media to make an issue that was never an issue as the highlight of the campaign.  Unfortunately, it creates confusion and suppresses voter turnout. The unions want to make sure you don’t vote.

And the media? Well, the same people that complain about low turnout are the same ones who knowingly help write the stories depressing turnout.

Fact: Death/disability claims are a LIFE INSURANCE plan and not a pension.  They’re not even close to being part of this initiative. 487 covers only the City of Phoenix pension plan. The police/fire are covered by the state pension plan not by the city plan. Phoenix cannot opt out of that plan. Police and Fire are clearly excluded.

I thought long and hard whether to write this column, but I believe strongly every vote matters.  Any delay in getting out the reality behind the politics would be doing you and disservice. The only way we will win is if the public gets the truth, please pass this on to your email list!

I am sorry that was to done to you, but you are the last ray of hope if we are going to change and reform our pension system.  Our city needs your help and we need you to vote.  Please don’t let them win by not voting.

Vote YES 487

Sal DiCiccio: Pension Reform Matters – Vote YES on 487

MillionaireFirefighter

$1.1 Million: Cash Payout to one Firefighter at Retirement and then STARTED his annual Pension of $149,420-for life. He retired at 54.

$955,000: Cash Payout for another Firefighter. He then started a $130,000 pension for life. He retired at 53.

See the list of Firefighter retirees below:

Average Cash payouts at Retirement: $679,672

Average Yearly Pension: $111,296

Average Age at Retirement: 53

24 Firefighters cashed out over $16 million in retirement and then started their pensions.

Every single city employee (Everyone) gets both a Cash Payout AND a Pension.

Vote YES 487/Stop Pension Abuse

We all love our firefighters and respect them for the hard work they give our city. You’re probably wondering why they’re coming in droves to our neighborhoods handing out misleading information on pension reform? Especially since they’re clearly excluded from the pension reform proposal. Why, because they’re concerned that they may be next for reform.

The numbers from above are from Budget and Research and from the state of Arizona Retirement plan (PSPRS).

Why does pension reform matter? Without reform you will see more:

New and higher taxes: Phoenix passed a new water tax on you to pay for  pension spiking.

Cuts in Service: Phoenix is short over 500 police, cuts were made to seniors, libraries, seniors and children.

The government unions are doing all they can to undermine your vote. They want to keep everything…the way it is. Their union and their spokesman are purposely using strong arm tactics to attack people who support pension reform.

Here are the numbers:

PensionNumbers

What does 487 do?

* It immediately stops pension spiking. This alone would save over $19 million per year
* Fixes the broken pension system saving over $400 million.
* Allows current employees to keep everything they have earned.
* Makes new employees get the same retirement benefits you get. Moving all newemployees to a 401(K).
*Police and Fire are clearly excluded from the proposal.

Vote YES 487

Yes487

My best to you and your family,

Sal DiCiccio
Phoenix City Councilman

Mesa’s Debt Bomb, thanks to former Mayor Scott Smith

By Gene Dufoe

This brief study of the City of Mesa FY2014/15 Budget has been compiled by Mesa resident Gene Dufoe. Mr. Dufoe is a retired Boeing engineer/manager who possesses the following degrees: BSAE, MSAE, and an MBA with an emphasis in Finance. He is a Precinct Committeeman in LD25. Dufoe supports Danny Ray for Mayor of Mesa, Dr. Ralph Heap for the LD25 Senate seat presently held by Bob Worsley, and Diane Douglas for Arizona Superintendent of Public Instruction.

Note:  There are four utility system revenue bond authorization questions on the November 2014 ballot, one each for Water, Wastewater, Natural Gas, and Electric.  Total will be $580,000,000.  See the City Council Resolution

LOOKING AT THE CITY OF MESA BUDGET FOR THIS FISCAL YEAR 2014-2015

Normally, the City of Mesa publicizes only the millions of dollars of Total General Obligation Bonds, Total Utility Systems Revenue Bonds, Total Street and Highway User Revenue Bonds, and Total Excise Tax Obligations outstanding, not the total bonds obligation or the interest obligation.  However, both need to be exposed.  The City of Mesa Total Bonds outstanding is $1,710,800,001 for FY2013/2014 vs. $1,220,778,673 for FY2008/09.

The scheduled interest to be paid through 2037/38 is $302,539,619 for only the General Obligation Bonds issued during Scott Smith’s administration.  This is nearly three times greater than was paid on the General Obligation Bonds issued under the previous administrations.  The comparison of the Utility Revenue Bonds is even worse, $71,360,274 vs. $327,537,942, or 4.6 times greater.

During Mayor Hawker’s service from 2000 to 2008, several bond issues were refinanced from earlier administrations, and the total interest paid was only a fraction of the repaid principal.  However, the financial situation of Mayor Smith’s term of office from 2008 to his recent resignation in June, 2014, has placed the City of Mesa in worsening financial terms for the future.

Without considering the interest on the General Obligation Bonds, Utility Revenue Bonds, Street & Highway User Revenue Bonds, and Excise Tax Obligations, nearly $500,000,000 of additional bonds have been approved during Mayor Smith’s period of service.  Interest on the General Obligation and Utility Revenue Bonds will add $630,000,000 through 2037-38, totaling more than $1.1 BILLION additional debt added during Mayor Smith’s time in office.  The interest on the $114,650,000 Street and Highway User Bonds and the $216,115,000 Total Excise Tax Obligations outstanding in FY2013-14 will add to the $630,000,000 interest total; however, the exact amounts were not readily available.

In addition to those bonds outstanding (and the bonds which have been authorized, but not yet sold), the Proposed Five-Year Capital Improvement Program has $680,392,701 which needs future authorization.  These proposed bonds, needing future authorization, will likely be voted on in the next 3-4 years.  Per the FY2014/15 Final Budget Summary, the City is not obligated to a project by inclusion within the CIP.  Each project is considered individually by the City Council during the year.

The reason that the interest scheduled was so much higher during Mayor Smith’s years in office is that both the length of the bonds were extended, and the payment of principal was also substantially delayed until the last years of the bond life.  For example, under the previous mayor, $11,705,000 2005 General Obligation Bond life was 18 years and the total interest scheduled was $4,128,700 or Total Interest Paid/Principal Repaid = 36.9%.

However, under Mayor Smith, the $30,865,000 2010 General Obligation bond life was 20 years, the total interest scheduled to be paid is $26,416,950 and Total Interest Paid/Principal Repaid = 85.59%.  The reason was no principal was scheduled for the first 9 years, principal payments of $1,115,000 to $2,500,000 were scheduled for the tenth to the nineteenth years, and in the twentieth year, the principal payment of $13,225,000 was scheduled.  The Total Interest Paid/Principal Repaid = 85.6%.

However, that is NOT the worst.  The Utility Revenue Bonds which are paid by the City of Mesa residents through the Secondary Property Tax and the monthly utility bills are managed by the City of Mesa’s business portion, called Enterprise Fund.  The Enterprise Fund transferred $173,606,136 to other current obligations of the city, per the City of Mesa Summary of Estimated Revenues and Expenditures, FY2014/15.

For the $50,380,000 2010 Utility Systems Revenue Bonds, the City of Mesa has scheduled interest payments of $3,073,280 annually for 24 years with no principal payments for the first 23 years with the entire principal scheduled $50,380,000 for the 24th year.  The total interest scheduled is $73,380,000.  The ratio of Total Interest Paid/Principal repaid = 134.2%.

Slightly less bad for the taxpayers are the $36,385,000 2014 Utility Systems Revenue bonds in which the City of Mesa has scheduled estimated interest payments of $1,819,250 annually for the first 23 years with no principal payments for the first 22 years; principal payments of $20,000,000 in the 23rd year and scheduled interest payment of $829,250 and principal payment of $16,385,000 in the 24th year.  Total interest $42,620,000.  The ratio of Total Interest Paid/Principal repaid = 117.43%.

If the voters do not approve the State Imposed Expenditure Limitation Home Rule Continuation, then the City of Mesa will need to eliminate $184 million from the budget, starting with FY2015-16.  The one-time override alternative allows for exceeding the state imposed expenditure limitation for one fiscal year.  If the State Auditor General determines a city has exceeded the expenditure limitation, a portion of its share of the state income tax allocation is withheld.   The penalty is assessed as follows:

Exceeding by less than 5% – penalty will equal to amount of the excess.

Exceeding by more than 5%, but less than 10% – penalty will be three times the excess.

Exceeding by more than 10% – penalty will be five times the excess or 1/3 of the state income tax allocation, whichever is less.  If the State limitation has been exceeded by more than 10%, the expected penalty to apply to FY2014/15 would be $17.7M (based on one-third of the FY2014/15 state-shared revenue).

The FY2014/15 budget does not allow the City to address the backlog of needs considered to be lifecycle or infrastructure replacements.

The contributions to the vehicle replacement fund do not address the full annual need nor do they allow for a reserve balance to mitigate future years where needs may spike.

The aging of buildings, technology, equipment, etc., requires scheduled upgrades/replacement.

A special commission of private-sector, public-sector, and retired personnel should be formed to make recommendations to the Mayor and the City Council for actions to be taken.  It is time for the City of Mesa to cut all but the absolutely essential services and reduce the city payroll, plus have active and retired city employees pay a larger portion of their medical, dental, and vision expenses.  By contrast, most private business employees pay a high percentage of medical, dental, and vision expenses; retirees have paid for their entire medical, dental, and vision expenses for many years.  Recommendations for the Arizona State Retirement System, Public Safety Personnel Retirement System, and Elected Officials Retirement Plan should also be considered.  Privatization of some or all of the services provided by the Enterprise Fund should be part of any such study.

References

  1. City of Mesa Executive Budget Plan 2014/15 & FY2014/15 Community Report Average Homeowner’s Cost Comparison
  2. Secondary Property Tax – Resolution No. 10478
  3. FY2014/15 Legal Budget – Resolution No. 10473
  4. FY2014/15 Capital Improvement Program – Resolution No. 10472
  5. FY2014/15 Final Budget City Council Report
  6. FY2014/15 Final Budget Summary
  7. FY2014/15 Home Rule – State Imposed Expenditure Limitation – Home Rule Continuation Presentation
  8. FY2008/09 Community Report Average Homeowner’s Annual Cost Comparison
  9. FY2008/09 Tentative Five-Year Capital Improvement Program
  10. FY2008/09 Final Budget City Council Report
  11. Pledged Debt Analysis For Continuation of Impact Fees City of Mesa, Arizona, prepared by Duncan Associates, April 16, 2013
  12. Preliminary Official Statement dated May 15, 2014; $37,550,000 City of Mesa, Arizona, General Obligation Bonds Series 2014, APPENDIX B
See Also Questions from Mr. Dufoe and answers from Ryan Wimmer, Mesa’s Office of Management and Budget:

1.  General Obligation Bonds (refunding) What was the bond rating for the City of Mesa GO refunding bonds over the past six years?  When are the annual bond principal installments being redeemed and at what interest rate?

Series

2002       OS: http://emma.msrb.org/MS191242-MS166550-MD322389.pdf (see page 13 for ratings and the cover page for principal maturity and interest rates)

2004       OS: http://emma.msrb.org/MS217101-MS192409-MD373504.pdf (see page 14 for ratings and the second cover page for principal maturity and interest rates)

2006       OS: http://emma.msrb.org/MS52419-MS223977-MS616035.pdf (see page 13 for ratings and the second cover page for principal maturity and interest rates)

2012       OS: http://emma.msrb.org/EP609526-EP476667-EP877042.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2013       OS: http://emma.msrb.org/EA522649-EA407230-EA804180.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2.  The General Obligation bonds (Various Purpose) are as follows:

What was the bond rating for the City of Mesa Bonds – Various Purpose bonds when issued?  When are the bond annual bond principal installments being redeemed and at what interest rate?

2005       OS: http://emma.msrb.org/MS236093-MS211401-MD411149.pdf (see page 12 for ratings and the cover page for principal maturity and interest rates)

2006       OS: http://emma.msrb.org/MS52250-MS223608-MS615968.pdf (see page 12 for ratings and the cover page for principal maturity and interest rates)

2007       OS: http://emma.msrb.org/MS259729-MS235037-MD458462.pdf (see page 12 for ratings and the cover page for principal maturity and interest rates)

2008       OS: http://emma.msrb.org/MS270908-MS267339-MD528351.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2009       OS: http://emma.msrb.org/MS281039-MS280291-MD568491.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2010       OS: http://emma.msrb.org/EP431918-EP339205-EP735523.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2011       OS: http://emma.msrb.org/ER460776-ER359128-ER755820.pdf (see page 8 for ratings and the cover page for principal maturity and interest rates)

2012       OS: http://emma.msrb.org/EP644009-EP503264-EP904180.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2013       OS: http://emma.msrb.org/ER666235-ER517392-ER919995.pdf (see page 8 for ratings and the cover page for principal maturity and interest rates).

3.  Utility Systems Revenue Bonds (refunding) What was the bond rating for the City of Mesa Utility refunding bonds over the past six years?  When are the annual bond principal installments being redeemed and at what interest rate?

2002       OS: http://emma.msrb.org/MS188305-MS163613-MD316547.pdf (see page 13 for ratings and the cover page for principal maturity and interest rates)

2002A    OS: http://emma.msrb.org/MS197504-MS172812-MD334877.pdf (see page 14 for ratings and the cover page for principal maturity and interest rates)

2004       OS: http://emma.msrb.org/MS217102-MS192410-MD373506.pdf (see page 12 for ratings and the cover page for principal maturity and interest rates)

2006 (both issues)  OS: http://emma.msrb.org/MS52416-MS223973-MS616031.pdf (see page 12 for ratings and the cover page for principal maturity and interest rates)

OS: http://emma.msrb.org/MS254547-MS229855-MD448008.pdf (see page 13 for ratings and the second cover page for principal maturity and interest rates)

2008       OS: http://emma.msrb.org/MS270955-MS267402-MD528506.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2012       OS: http://emma.msrb.org/EP608885-EP476146-EP876514.pdf (see page 10 for ratings and the second cover page for principal maturity and interest rates)

2012 Taxable Refunding.  OS: http://emma.msrb.org/EP615721-EP481744-EP882241.pdf (see page 11 for ratings and the second cover page for principal maturity and interest rates).

4.  Utility Systems Revenue Bonds (Utility Improvement) What was the bond rating for the City of Mesa Utility Improvement bonds when issued?  When are the bond annual bond principal installments being redeemed and at what interest rate?

2002       OS: http://emma.msrb.org/MS188116-MS163424-MD316173.pdf (see page 12 for ratings and the cover page for principal maturity and interest rates)

2003       OS: http://emma.msrb.org/MS203914-MS179222-MD347345.pdf (see page 12 for ratings and the cover page for principal maturity and interest rates)

2004       OS: http://emma.msrb.org/MS222295-MS197603-MD383623.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2005       OS: http://emma.msrb.org/MS235923-MS211231-MD410807.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2006       OS: http://emma.msrb.org/MS52220-MS223454-MS615938.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2007       OS: http://emma.msrb.org/MS259549-MS234857-MD458102.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2008       OS: http://emma.msrb.org/MS270681-MS267070-MD527833.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2009       OS: http://emma.msrb.org/MS281167-MS280466-MD568877.pdf (see page 9 for ratings and the cover page for principal maturity and interest rates)

2009 WIFA Loans – WIFA loans are not rated by the rating agencies.  Redemption schedules are attached.   (See 2009 WIFA loans.)

2010       OS: http://emma.msrb.org/EP431713-EP339023-EP735345.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2012       OS: http://emma.msrb.org/EP643903-EP503173-EP904086.pdf (see page 10 for ratings and the second cover page for principal maturity and interest rates)

2013       OS: http://emma.msrb.org/ER666086-ER517255-ER919851.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2014       OS: http://emma.msrb.org/EP820778-EP635288-EP1036999.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates).

5.  Street and Highway User Revenue Bonds (refunding) What was the bond rating for the City of Mesa Street and Highway User Revenue Refunding Bonds over the past six years?  When is the annual bond principal installments being redeemed and at what interest rate?

2004       OS: http://emma.msrb.org/MS217103-MS192411-MD373508.pdf (see page 14 for ratings and the cover page for principal maturity and interest rates)

2005       OS: http://emma.msrb.org/MS230312-MS205620-MD399580.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2012       OS: http://emma.msrb.org/EP608850-EP476109-EP876480.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2013       OS: http://emma.msrb.org/EP759947-EP589453-EP990970.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates).

6.  Street and Highway User Revenue Bonds (Street Improvement) What was the bond rating for the City of Mesa Street Improvement bonds when issued?  When is the annual bond principal installments being redeemed and at what interest rate?

2003       OS: http://emma.msrb.org/MS203840-MS179148-MD347197.pdf (see page 13 for ratings and the cover page for principal maturity and interest rates)

2004       OS: http://emma.msrb.org/MS222376-MS197684-MD383785.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates)

2005       OS: http://emma.msrb.org/MS236032-MS211340-MD411027.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2006       OS: http://emma.msrb.org/MS52253-MS223605-MS615966.pdf (see page 10 for ratings and the cover page for principal maturity and interest rates)

2007       OS: http://emma.msrb.org/MS259518-MS234826-MD458040.pdf (see page 11 for ratings and the cover page for principal maturity and interest rates).

7.  Excise Tax Obligations Outstanding

Were the 2010 Highway Project Advancement Notes redeemed at the July 1, 2014, optional redemption date at par? Yes.

What was the bond rating for the 2010 and 2011A City of Mesa Highway Project Advancement Notes since they were issued?

2010 – OS: http://emma.msrb.org/EP430767-EP338370-EP734691.pdf (see page 10)

2011A – OS: http://emma.msrb.org/EP571936-EP448917-EP848828.pdf (see page 14).

What was the bond rating for the Phoenix-Mesa Gateway Airport Authority obligations when they were issued?

OS: http://emma.msrb.org/ER583308-ER453122-ER855821.pdf (see page 15)

What is the rating, purpose, refunding, and interest rate paid on the Excise Tax Revenue Obligations issued in 2013?

OS: http://emma.msrb.org/EP751300-EP583298-EP984886.pdf (see page 13 for ratings, the second cover page for interest rates, and “Optional Redemption” on pages 2 and 3 for refunding provisions)

Regarding the purpose, from the cover page:

The City of Mesa, Arizona (the “City”) Excise Tax Revenue Obligations, Series 2013 (the “Obligations”) will be executed and delivered in the principal amount of $94,060,000 for the purpose of providing funds to (i) acquire and construct the Project (as defined herein) and (ii) pay costs of execution and delivery of the Obligations.

See “The Obligations” on page 2 and “The Project” on page 4.

8.  Have any of the overlapping jurisdictions informed the City of Mesa that they were in danger of not meeting their bonded debt obligations under the “Direct and Overlapping General Obligation Bonded Debt Outstanding” category? No.

9.  What is the schedule of planned sales of any authorized, but not issued, City of Mesa General Obligation bonds, Utility System Revenue bonds, Street and Highway User Revenue bonds or Excise Tax Obligations notes since 2013?

General Obligation and Utility System forecasted issuances are attached.  (SeeAuthorized Bonds – Issuance Forecast.)  There are currently no plans to issue Street and Highway User Revenue or Excise Tax bonds.

Have there been any additional refunding issues replacing series issues since 2013? No.

10.  Are there be any City of Mesa General Obligation Bonds issues, Utility System Revenue Bonds issues, Street and Highway User Revenue Bonds issues or Excise Tax Obligation notes to be submitted to the voters on the November, 2014 ballot?

There are four utility system revenue bond authorization questions on the November 2014 ballot, one each for Water, Wastewater, Natural Gas, and Electric.  See the City Council resolution at: http://mesa.legistar.com/LegislationDetail.aspx?ID=1821143&GUID=DB2A249F-5A7B-459F-A506-2A6379B8B9EC.

Scott Smith’s Pursuit of Big Pay Raises

At a time when millions of Arizonans have struggled to make ends meet through the Great Recession, there’s one gubernatorial candidate who’s been indifferent to the plight of his paycheck-to-paycheck neighbors.

Former mayor of Mesa Scott Smith, whose net worth still remains undisclosed (although we know it’s well over $100K), pushed hard twice while mayor of Mesa to increase his pay and the pay of his fellow council members.

Prior to the increase, the charter for the city of Mesa locked in the mayor’s compensation at $33,600/year with a $1,800/year vehicle allowance and $960/year phone allowance. To change that compensation, the mayor and council are required to vote rather than send the issue to voters.

Smith made the first push to increase his salary on December 10, 2012 during a regular session of the mayor and council. In the video, Smith argues for increasing his pay and not to reject the recommendations of an independent commission.

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During that first attempt, he asks the council to support him for the 118% pay raise and allowance increase of 122%. As the video shows, Smith’s temperament reveals a man on a mission to make more money as mayor.

If you haven’t worked out the math yet, the 118% pay raise would take the mayor’s salary to $73,300/year and the vehicle allowance to $6,600/year. Keep in mind, this is for a part-time mayor and council.

During the first attempt, the vote fails with Smith visibly upset that the council turned down his request.

One year later, On December 9, 2013, Smith makes the push to hike his salary once again using the same commission recommendations. He chides the council, “it was right a year ago and it’s right now.” This time Smith is successful in pressuring the council to raise his and their pay.

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The Mesa Charter is amended with the new and outrageous increases but what the average citizen never sees (unless they watch the December 9, 2013 video) is that the mayor and council also voted to make themselves eligible for benefits “consistent with those provided to executive level City employees.” So now in addition to the pay raise, Mesa’s mayor and council are now receiving the same benefits as senior city management.

Mesa Mayor & Council Compensation Footnotes

One comment that sticks out during the debate, is that Smith notes that Mesa is the 38th largest city in the country and its mayor and council deserve to be compensated as such.

Given Mesa’s population is ranked between Tucson and Chandler, we reviewed their compensation rates to see if Mesa ball parked itself proportionally on elected official compensation rates.

Tucson, which is the second largest city in Arizona, compensates its mayor at $42,000/year. Chandler, ranked as the fourth largest city, pays its top elected executive $49,500/year. Mesa ranked third, is well above the Arizona cities above and below it by $23,800.

But we also took it a step further and looked at Mesa in terms of its population ranking among other US cities. Just above Mesa is Kansas City, Missouri which pays its mayor $123,156/year. Right below Mesa, is Virginia Beach whose mayor makes $10,000/year. Quite a variation but more like comparing apples to oranges.

Finally, we reviewed 2012 US Census data to see what the average median income is for the city of Mesa. According to this latest data, the average family in Mesa earns $47,256/year.

For the mayor of Mesa to relentlessly push for a dramatic pay raise during a time when many Mesa citizens remain in financial hardship due to reductions in salaries, hours or even job loss, anyone can see that Smith’s crusade to raise the mayor and council’s salary was not the right thing to do.

Arizona voters are worried that this style of governance will be more of the same business-as-usual. Conservatives reformers are trying to put an end to runaway spending, backroom union deals and corporate cronyism. Scott Smith’s style of management proves he’ll push the former and disturbingly his own self-interest no matter what it cost the citizens he’s supposed to serve.