Portland: A city deep in hock
For more than a year now, I've had on my to-do list to take a good look at the credit card bills being racked up by the City of Portland. Our municipal government's always borrowing money -- for urban renewal, for the Big Pipe project, to pay pensions, for all kinds of purposes -- and frankly, I'm worried that it's getting us taxpayers in way over our heads.
For months, I've been dragging around with me the city's last two big, fat annual financial reports -- something called CAFRs -- but they're so long-winded, detailed, and full of jargon that it's hard to make heads or tails of them. Moreover, it takes forever for them to come out. For instance, the report for the municipal fiscal year ended this past June 30 -- that was three months ago -- won't be made public for another four months. If you're trying to get a current picture out of that document, it's hopeless, because the snapshot it provides is always seven months old or more.
But determined to find something more current, yesterday I scoured around a bit, and I believe I landed on exactly what the doctor ordered. It's this document:
I happen to know a bit about what this is, because in my time as a corporate lawyer, I drafted a couple of these. It's the "preliminary official statement" for some bonds that the city is now in the process of selling. In this case, the city's peddling 20-year bonds (i.e., borrowing money) to the tune of about $12 million to buy a "condo interest" in part of a new Portland State University building that will house the city's new archives. The bond sale is scheduled to go down next Tuesday.
Unlike the fat annual reports, the "POS," as it's known, has to be written in plain English. It's essentially a sales pitch, but by law, it must disclose all the material facts that an investor would reasonably want to know in deciding whether to invest in the city's IOU's. Financial institutions that buy bonds (i.e., lend big bucks) don't want hundreds of pages of hide-the-ball data, which is what the CAFRs seem like to me. No, they demand the straight skinny.
And so now we're ready to find out: Just how much debt is the City of Portland really in?
First, the latest number on the unfunded actuarial liability of the police and fire pension and disability fund. As of July 1, it's $1,802,394,343. That's $1.8 billion, with a "b."
Then there are the bonds, and they come rolling in at some high numbers:
- Unlimited tax general obligation bonds: $67,850,000That's $2.4 billion, again with a "b."
- Self-supporting bonds paid and/or secured by the general fund: $652,101,460
- Revenue bonds: $1,706,844,666 (including roughly $1.2 billion for sewer, $272 million for urban renewal, and $201 million for water)
- Total: $2,426,796,126
The grand total of the police and fire pension and disability liability and all the bonds: $4,229,190,469. That's roughly $4.2 billion of long-term debt that the city is staring at.
Is it anything to be concerned about?
It is if you look at it this way: They can talk all they want about what each debt is secured by, pots of money, dedicated revenue, etc., but the plain truth is that taxes get paid by people. Even corporate taxes get passed on to consumers, and a landlord's property taxes get passed on to the tenants. According to the POS, the population of the city is currently 562,690. If our debt is $4,229,190,469, at that population level it works out to $7,516.02 per resident.
Thus, the average man, woman or child living in Portland right now owes around $7,500 in long-term debt to individuals and corporations who own the city's bonds. And so it's time to get the old debt clock up on this blog:
Of course, it doesn't stop there. Metro is listed in the document as having $122 million of "property-tax backed debt" outstanding; Multnomah County another $256 million; Portland Community College another $113 million; the Portland school district another $472 million; and Tri-Met another $94 million. I don't have the populations of all those taxing jurisdictions handy, but it looks to me as though you can easily add another $1,000 a head for those bonds.
Yep, every resident in Portland owes something like $8,500 on account of local government debt. If you've got four people in your household, as I do, that's $34,000.
Not counting the state. Not counting the feds.
There are lots of additional fascinating details in the POS. I'll blog some more about them in the near future. But everyone who's interested in city government should download it (before it disappears) and look for themselves. Did you know that city tax collections for 2006-07 were actually down slightly from the year before? That the city has $172 million of short-term notes and lines of credit floating around? That 13.7 percent of all wages in the metropolitan area went to government workers?
Meanwhile, get ready to pay your 8,500 bucks. Plus interest, of course.