City of Phoenix officials are cheering on Phoenix’s bond election, hoping to push it to electoral success. Mayor Phil Gordon calls the March 14 election “the day we boldly define our future.” Bold indeed. Boldly irresponsible.
Bonding always costs more than advertised. Phoenix wants to issue $878 million worth of bonds’"a.k.a. go into debt’"to fund various projects. But according to city estimates, residents will have to pay an additional $1 billion in interest alone, putting the real cost of the package at $1.8 billion.
In the past two years, Phoenix’s annual payments on its overall debt have soared from $349 million to $623 million. And, according to the city’s latest financial report, it already has $3.7 billion in outstanding debts.
This may leave you wondering how Phoenix officials plan to pay for the new bond without raising taxes, as they claim. We’re still wondering too.
Every year when you receive your property valuation and it’s higher, you owe more in taxes, right? Property taxes are one of the largest revenue streams for cities, and consequently are used to pay their bills, like debt. So, while your property tax rate may not go up, your tax bill still does. The city is counting on that annual increase to pay for the bond.
Phoenix would be wise to pay off old debt before taking on new spending. That is something everyone could cheer for.