By Juan Montoya
During a recent update on the financial condition of the City of Brownsville investment bankers Estrada and Hinojosa told the city it had a little more than $347 million in existing outstanding debt that the generations of Brownsville will continue paying until 2026.
Most of these were issued as Certificates of Obligation, a favored method of incurring debt which are passed by the city commission without having to go to the public for a vote.
Nonetheless, Noe Hinojosa – at the behest of the city administration and commission –presented a proposed Capital Improvement Plan (PIC) for the next five years starting in 2017 with a price tag of an additional $236 million.
How to pay for the additional debt?
The financial advisers came up with the imposition of a new "drainage use" tax which would add an additional tax burden of $27 million to city taxpayers, have the Greater Brownsville Incentives Corporation "loan" the airport $27 million for the new airport terminal, and aggressively seek federal and state grants. That's in addition to the property tax already levied on the residents.
But it is the role of the PUB in the cash "transfer" payments for some of the improvements on the CIP that raised some eyebrows. It also made some of the listeners take a closer look at how consecutive city commissions have used the PUB as a source of cash to offset their chronic deficit budgets.
In fact, since 2003 (that's as far back as the analysis went) PUB has made cash transfers to the city starting at $3.7 million and provided $3.1 million in free utilities. In that year, the combined transfers and utilities totaled $6.8 million.
By the end of this year (2016), the cash transfers had increased to $9.5 million and utilities to $4.7 million. The total in cash and free utilities today are $14.2 million.
The 2017 budget has a $8.6 million cash transfer and a $5.0 million in utilities for a total of $13.6 million from the utility to the city.
This has made some people question whether the city's continued habit of making cash and utility "transfers" from the PUB amounts to a double tax on local residents.
"As long as you have the PUB as a cash cow there really is no need to trim costs or reduce waste," said a city critic whose comments during city meeting are blacked out as per advice of city legal counsel Mark Sossi. "Why watch costs when you can just lean on the city-appointed PUB members and they will fork over the cash?"
In fact, in 2010 and 2011, the city went to the PUB for additional "economic assistance" to help tide them over in those lean years. In 2010, they got $3 million more and in 2011 they settled for and additional $2.5 million.
Now, with an additional $90 million piling up in the PUB coffers due to the increases in utility rates approved by the city commission starting in 2013 to build an 800 MWs electric generating plant with Tenaska, a private corporation, city officials are salivating at the idea of raiding the PUB again to pay for part of the CIP.
That project, envisioned for completion in 2016, has been delayed to start until 2018 because Tenaska has found no customers for 600 of the 800 MWs it will generate. The city will get 200 MWs for its $325 share of the cost.
"(City Manager) Charlie Cabler has been trying to talk the PUB to share some fo the wealth, but some of the members are not buying it," said the critic. "They don't think it's right that the ratepayers be taxed once again for the projects that the city commission wants to fund."
Will the PUB give in to the pressure exerted by the city and hand over some of the loot paid by ratepayers? Or will some crusading attorney come in nand put a stop to the pigs feeding twice at the same public trough?