It's that time of the year again for the Mesa City Council to hear presentations, discuss and provide direction in a series of public hearings for the annual end of the fiscal year June 30th. Several audits have been done this past year, with more being scheduled. The new Proposed Budget Reviews for next year FY2019/2010 started weeks ago in public hearing in front of the Mesa City Council - where not too many members of the public bother to take the time to get informed about. Budgets are complex and complicated. Unless you are a financial analysis, you might not question the data presented or how the accounting is done to "balance-the-books". These public city department proposed budget hearings will continue until probably May 31st. 
Sooner or later most all the monies that are funding sources for what the City spends come right out-of-your-pockets.
(There is a dis-proportionate share of that allocated to District 6 if you don't know that already.)
There are huge obligations for a number of things that are better understood in an article recently posted by Jeremy Whittaker who was elected to Mesa City Council a couple of years ago, joining five other councilmembers and the mayor.
He's probably one of the few representatives who has the business background to analyze and understand the data and numbers produced by City Manager Chris Brady, Mike Kennington the city's Chief Financial Officer, and the Office of Management & Budget.
"It’s been a while since I’ve written anything on the financial health of Mesa and I feel like now would be an appropriate time.
If you don’t follow finances or understand accounting, I would be glad to meet and explain further in person, 480-648-3756, if you have any questions or concerns."
_______________________________________________________________"The most relevant thing I want to outline in this article is that we not only have a fiduciary responsibility for the city of Mesa (as a municipality), but ultimately our primary responsibility is for the future welfare of all 500,000 people residing here. It is extremely important that we draw a distinction between the two because what looks good at the city level is a lot of the time detrimental to the people who live in Mesa. This is mainly due to higher taxes and utilities to cover the ever-increasing costs.
Good for Mesa Bad for Taxpayers and Utility Customers
Let me explain by giving a few examples of what I’m referring to.
As the City’s financial situation becomes worse due to its increased spending, the bond rating agencies would normally lower Mesa’s credit rating. To prevent this from occurring, the city must raise additional revenue to replenish their funds and cover their operating costs.
As the City’s financial situation becomes worse due to its increased spending, the bond rating agencies would normally lower Mesa’s credit rating. To prevent this from occurring, the city must raise additional revenue to replenish their funds and cover their operating costs.
There are five ways the city can accomplish this:
1) neglect the investment in infrastructure (capital improvement projects)
2) amortize the debt over a longer time period
3) create new debts (bonds)
4) increase utility rates
5) increase sales tax (as a percentage).
We have done all five, here are some examples:
Organizations and companies don’t normally
function this way
In a normal functioning organization or corporation, capital assets are depreciated over a long time period to determine how much money should be held in reserves to pay for these investments.
However, the city uses its utility system to leverage a massive amount of debt to ultimately transfer utility revenues to the general fund to be spent on discretionary items. The goal is to load up the system with debt rather than address the ever-increasing expenditures.
Holding voters hostage
I refer to utility bonds as, “holding voters hostage”. I felt this way when I ultimately had to vote to approve them this month. You will constantly hear the argument that we have debt because voters approved it. Of course voters are going to approve bonds for clean water and infrastructure, who in their right mind wouldn’t. The main problem is that the money being generated from the Mesa utility enterprise and its debts is not being reinvested in utility infrastructure and instead is being siphoned off in the amount of 30% every year.
Another:
I am proposing we do exactly what the bond rating agency reports suggest and cap on the amount of money the city is permitted to transfer out of the enterprise fund and into the general fund for discretionary spending.
LINK TO THE SOURCE > Jeremy Whittaker. com (website)
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In Summary
Mesa’s wealth is your wealth, collectively.
You should exercise extreme caution when politicians tell you that spending more money through bonds and debt financing is the path to wealth. It is, in fact, the exact opposite.
Debt is an extremely powerful tool that can be used to disguise today’s problems while burdening future citizens of Mesa with these liabilities if it’s not used properly.
We should invest Mesa tax and utility revenues in maintaining and repairing our aging infrastructure and addressing our pension obligations.
> Only after Mesa has addressed these long term issues should Mesa tax and utility revenues be used for any discretionary projects.
> Amortization of liabilities sets a dangerous trap that our kids will have to deal with it when it’s snowballed into a massive debt that will be too big to pay back.
Be cautious of people who simply regurgitate bond rating agency reports without actually digesting them
