Charter Foes Exaggerate City’s Debt How Much Debt Would County Residents Incur? Not As Much As Some Would Have You Believe
Charter boosters say it’s a red herring. Opponents say it’s a cover-up.
Either way, city debt has become one of the biggest issues in the campaign to consolidate Spokane city and county government.
Vote for consolidation Nov. 7, opponents tell residents in unincorporated areas, and you’re helping pay $642 million the city already owes.
The number is off by at least $208 million, and maybe by more than $600 million. But that hasn’t kept anti-consolidation campaigners from using it in interviews and debates.
Former Spokane City Councilwoman Margaret Leonard raised the issue just before Valley Republicans voted to oppose consolidation. Democratic activist Joe McKinnon used the figure when his party voted to oppose consolidation.
“I get all this gobbledygook about how it’s not true,” McKinnon said. “It’s going to be paid by somebody and the city isn’t going to exist.”
Charter boosters dispute the figure but can’t offer an exact number to replace it.
Debt, like many other consolidation issues, is untested because Spokane would be the first city-county merger in state history. The $642 million figure comes from a list of city and county obligations - including bonds, the interest that must be paid on them and the future cost of paying employees’ retirement - compiled by a freeholders committee in 1993.
The county’s debt - about $147 million, according to freeholders - isn’t an issue because opponents say city residents already help pay it off.
Actually, the taxes city residents pay to the county are for regional services only. How much of the $147 million they’re helping pay - and how much more they would pay under consolidation - isn’t clear.
Sue Kaun, who chaired the committee and opposes consolidation, notes that the proposed charter would make the new government responsible for “all property, contracts, indebtedness and legal obligations” of either the city or the county.
“That’s all obligations,” Kaun said. “If someone wants to say I’m wrong, let them tell us where.”
One item on Kaun’s debt list is easy to dispute. Her committee included $208 million in bonds for projects like the trash incinerator and the Creek at Qualchan golf course.
Golfers are repaying the bonds on the golf course with their greens fees. Anyone who pays a garbage bill is repaying the incinerator bonds.
Non-users would be on the hook only if golfers hang up their clubs or the incinerator closes.
And if the $105 million incinerator does close, every resident in the county will have to pay regardless of whether the governments merge or stay separate, bond attorneys say. That’s because the incinerator is a regional project, even though it’s run by the city.
Of the remaining $434 million, some is repaid through designated funds that wouldn’t change regardless of consolidation. That includes the city’s share of the new arena, which is funded countywide through the sales tax and a tax on motel rooms.
Some bonds - like park, library and fire department improvements - are voter approved.
“They would continue to be an obligation of that area that voted,” said Garald Gesinger, the county attorney who advised freeholders.
In fact, only about $20.5 million in bonds are repaid from the city’s general fund, said city Finance Director Pete Fortin. The new government definitely would be on the hook for that money, Fortin said.
Retirement benefits for public employees are a tougher dilemma.
Accountants estimate the city will pay $111 million in pensions, mostly to police and firefighters hired before 1977, when a statewide pension fund kicked in.
Each year, people who shop in the city pay $2.5 million in sales tax that is earmarked for police pensions, Stone said. City landowners pay 47 cents for every $1,000 in assessed property value for the firefighters’ retirement fund.
It’s not clear whether the council could contain those taxes inside the current city limits.
Different tax rates on either side of a city boundary that no longer exists likely would spark a lawsuit from one side or the other. The charter allows different tax rates, but only “to reflect the level of service …”
But the charter wouldn’t merge the city fire department with the independent fire districts that serve unincorporated areas like the Valley. And the people served by those districts probably would object to paying city firefighters’ pensions when they’ve got pensions of their own to pay.
Fortin said pensions are one of many questions that can’t be addressed before the election.
“It would be 1997 before you get down to the nitty-gritty on these things,” he said.