Advocate Editorial Board opinion: Balance is key to managing town's finances

By the Advocate Editorial Board
April 27, 2013 at 4:01 p.m.
Updated April 26, 2013 at 11:27 p.m.

Debt is a popular buzzword for politicians, and it's no small wonder, considering the runaway spending exhibited by our national government. But there are times when debt serves a purpose, and that is turning out to be a big issue in the upcoming Victoria City Council election on May 11.

The City Council candidates' opinions on city debt seems, for the most part, to be divided between two opinions: Either all debt is bad, and we have too much, or debt is a tool the city is using wisely. It is true that debt can become overwhelming if not carefully monitored and limited, but we caution our readers against letting this national debt controversy sway their understanding of financial practices on the area level.

Victoria currently has a debt of $167.5 million. That large number may boggle the mind of most residents, but there is a big difference between the overwhelming debt problem in Washington and the level of debt Victoria currently has. The federal government is incurring debt to pay for everyday expenses. Victoria is operating under a balanced budget that covers those needs. The city's debt comes from necessary infrastructure projects, such as the downtown pipeline replacements or repaving Laurent Street and Sam Houston Drive. Each of these projects the city borrows to finance comes with a 20-year repayment schedule and is often partially funded by grants and other funds, such as the sales tax development corporation.

Debt is an important part of running a growing city successfully, says Victoria Finance Director Gilbert Reyna, and we agree. By taking this step and locking in a reasonable rate now, before waiting years and watching the prices for necessary work only to go up with inflation, city leadership is maintaining infrastructure and investing in our hometown's future success.

According to the city's website, limits in the Texas constitution and state government could allow Victoria to use up to $51,499,673 in debt valuation yearly. Victoria is only using $8,404,782 in the fiscal year ending Sept. 30. Our debt for the past year is not only well under our limit as defined by the state, but also our tax rate has decreased from 0.7 in 2004 to 0.6056 per $100 valuation. It stands to reason if our debt was out of control, our taxes would have to go up to keep pace to preserve the AA bond rating our city enjoys.

Considering these factors, we think the city is well within its debt limits. The word "debt" can seem frightening, but at times, it is necessary to keep our city running well for everyone. We encourage voters to take the time to understand our city's debt situation and judge for themselves. Just like when a family gets a loan to buy a home, not all debt is a bad thing. As long as our leaders understand the need for balance and restraint, Victoria's debt level will remain manageable.

This editorial reflects the views of the Victoria Advocate's editorial board.



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