Portland debt jumps toward $5 billion
A routine update of the clock in our left sidebar, showing the long-term debt of the City of Portland, reveals that the rate of increase in the city's bonded debt is quite a bit higher than we had previously thought. Figures given to us yesterday by the city's debt manager show that the city's long-term bonds and interim debt shot up by 11.02 percent between last October 8 and this May 1 -- from $2,610,486,126 to $2,898,272,916. On an annual basis, that's a growth rate of 18.9 percent.
Using (as we have) October 1, 2000 as our baseline, the city's long-term bonds and interim debt have grown at a compound annual rate of 6.22 percent (not the 5.18 percent we were using based on last September's numbers). Plugging in that 6.22 percent growth rate, the total long-term debt now stands at more than $2.9 billion -- not counting another more than $2 billion for the unfunded police and fire pension and disability system. The total is well in excess of $4.9 billion. That makes the municipal debt load for every Portland resident more than $8,600 -- nearly $34,500 for a family of four.
At the current rate, the city will hit $5 billion of long-term debt this summer.
And it's going to get way worse now that the spendthrift Sam the Tram is taking the reins as mayor. Fireman Randy says that he and his pal will be "very busy" next year, and indeed they will be -- racking up more debt.
It's clear that Adams either doesn't understand the city's financial picture or is unwilling to tell the truth about it. An alert reader sends us this audio clip of Adams on the Lars Larson radio show last week. In it, Adams states that (a) under current levels of taxation, the city's police and fire pension and disability obligations will be fully funded in 15 years, and (b) the city has a AAA bond rating. Both of these statements are demonstrably false.
The city's police and fire pension and disability system will not be fully funded in 15 years. The measure approved by the voters in November of 2006 (Measure 26-86) will not achieve this, and even its strongest backers never declared that it would. That measure puts newly hired police and fire officers into the state retirement system (PERS) on a funded basis, but officers hired before the measure took effect will still receive benefits paid for currently out of property taxes. That being the case, until every officer hired before 2007 (and in many cases, his or her surviving spouse) is dead, there will always be an unfunded liability in the system.
Our debt clock currently uses an annual growth rate of 6.5 percent for unfunded public safety pension and disability, which we think is conservative. We'll readjust it when official dollar numbers as of June 30, 2008 emerge. At that time, we'll also add in the newly calculated figure for the health insurance benefits that city employees enjoy -- that benefit is not included in the present $2 billion figure, but new accounting rules require that it be disclosed no later than the city's June 30, 2008 financial statements. (If the city has an idea what that number will be, it's not letting on.)
Moreover, the city's bond rating clearly is not AAA. The only way it has ever achieved such a rating in recent years was to have its bonds insured by one of two bond insurance companies, MBIA or AMBAC. Both of those companies gambled and lost in the subprime mortgage market, and now the city can't get an AAA rating, even with insurance policies from them. When the city sold sewer bonds last month, without insurance, the Moody's rating was Aa3 -- good, but far from a top rating. Aa3 is the bottom sub-tier of level Aa, which is itself below the Aaa rating of which Sam the Tram falsely boasts.
On and on we go. They'll keep borrowing, we'll keep clocking it. Vallejo, here we come.
At least the guys who build "luxury" apartments are happy. Go by streetcar!