Squeezed by past budget decisions and the tight economy, City Hall is preparing to ask voters this fall to approve only $110 million in bond projects – the smallest amount in 14 years.
Two years ago, the city put $164 million in projects on the ballot.
The slimmed-down total this year is due, in part, to decisions over the past decade to take property-tax revenue normally earmarked for capital projects and use it instead to help prop up the operating budget.
A 4 percent drop in property values since 2009 is another factor.
“It’s starving the capital program,” Mayor Richard Berry said Wednesday in an interview.
Berry estimated this year’s bond proposal would exceed $200 million if property-tax revenue hadn’t been shifted over to support operations. The last shift happened before Berry took office, in December 2009, under the administration of then-Mayor Martin Chávez.
Berry compared the transfers to “a 500-calorie-a-day diet” for City Hall’s construction budget.
The city has started to reverse the trend. Albuquerque’s $50 million contribution to the reconstruction of Paseo del Norte and Interstate 25, for example, was made possible by taking money out of the operating budget and applying it back to capital projects.
Albuquerque’s general-obligation bond program is the main way City Hall pays for road construction and repair, building renovations, computer upgrades, fire engines and similar needs.
Every two years, the city asks voters to approve bonds to pay for those projects – debt that is repaid with property taxes. New bonds are sold as old ones are paid off, so there’s no need for a property-tax increase.
The $110 million figure is based on keeping property taxes at the same level.
Isaac Benton, chairman of the council’s land-use committee, said he will take a close look at what the mayor has proposed.
“It’s always harder when you’ve got to cut,” he said. “There are so many demands – everything from library materials to police cars.”
This year’s small bond program is a consequence of about a decade of decision-making. Over the years, the city has switched more and more of its property-tax revenue away from the capital program and used it instead for basic operating expenses.
Those moves helped protect city services from cuts caused by downturns in the economy. There was also a fear that the city was building too many big projects anyway – museums and the like – that were expensive to operate.
Growth in property values helped the bond program continue to climb or hold steady through the years, even as the tax transfers were made to support operations. But property values have fallen over the last three years, forcing the city to confront the full impact of those past decisions, officials say.
“It was poor policy to shift (the taxes) in the first place,” said Berry, who argues the transfers allowed the city to spend more on operations than it should have.
He and others have discussed returning more of the property-tax revenue to the bond program when the economy improves.
In any case, this year’s capacity for only $110 million leaves less for roads and other basics, officials said, and some of the changes are dramatic.
In 2011, the bond program included $10 million for affordable housing, while this year’s request proposes $1.75 million. Street bonds were funded at $43 million in the last bond cycle compared to $34 million this time.
Altogether, this year’s proposal is the smallest since 1999, when the program totaled $101 million, city officials said.
— This article appeared on page A1 of the Albuquerque Journal