On November 16, the Phoenix City Council will decide whether or not to float an estimated $850 million in bonds to finance various projects, including libraries, senior centers, and police stations. If it does, voters will have the final say come March 14. Are bonds a healthy way to finance current spending?
As a wise man might say, it is better to live within your means.
In personal finance, issuing debt to pay for purchases today borrows against your future income. The risks and rewards of this type of financing are yours alone. But in government finance, issuing debt to pay for current spending bets on payments from taxpayers tomorrow, a game of chance in which government spends today, and depends on taxpayers to foot the bill later.
The city of Phoenix relies largely on property taxes and increasing assessments to finance its debt. Any slow down in property values will invite a spike in the tax rate. Rather than gamble on the back of taxpayers, the city should prioritize spending and bring current spending in line with current resources.
It is said that nothing is certain but death and taxes. But even James Bond has a better chance of escaping death than of surviving the crushing weight of future taxes promised by today's profligate spending.