May 18, 2015
Visit the project blog: The Municipal Sustainability Project
Architects of the Future. “We must be architects of a new beginning, and not slaves to the past,” San Bernardino Mayor Carey Davis stated Saturday in the wake of a presentation to the city’s strategic planning committee on the city’s current situation and possible future of the city’s proposed plan of debt adjustment—a plan which, unlike comparable plans in Detroit and Central Falls, Rhode Island, must be publicly approved before it can be submitted to the U.S. Bankruptcy Court next week. That is: there is a double approval process for a plan which is proposing significant changes in the way San Bernardino governs and which is proposing deep cuts and extensive restructuring. But it is also a plan, as in Detroit, Stockton, and Jefferson County, which is focused on the future. Nevertheless, the proposal received approval in advance of this afternoon’s vote by the City Council. Saturday’s session, at which representatives of business, education, religious and, other fields appointed by the Mayor to serve as a task force to decide upon a long-term strategic plan for the city, was a key step in trying to get broad community—in addition to Council, support. While the vote was advisory―another part of an effort to gather public input on the city’s plans―it appeared to demonstrate broad community report for the hard decisions and actions that lay ahead as the city proposes a plan to address its $20 million structural deficit and years of deferred maintenance that some project will cost some $200 million to address. The plan, which proposes extensive outsourcing, especially with regard to fire and refuse services—and a charter change, efforts to change that the city has previously, albeit unsuccessfully, provides an idea of how difficult a challenge lies ahead—even if the plan is approved by the City Council and, eventually, by the federal court. That is: it will be a plan of may complex provisions, changes in governance, new tax revenues—revenues counted on, but nevertheless dependent on the city’s voters—such as whether or not to renew the Measure Z sales tax in 2021―revenues the plan counts on to bring in $8.3 million annually.
Ojala! Puerto Rico’s leaders reached agreement Friday on a sweeping tax and spending plan that could result in a balanced budget for the U.S. Territory, albeit its implications, if this second such effort with the legislature were approved are uncertain. The agreement, framed by Gov. Alejandro García Padilla and legislators from his Popular Democratic Party, proposes more than a 50 percent increase in the territory’s sales and use tax, from the current 7 percent to 11.5 percent, out of which, about 90 percent of the revenues would go to the territory and just over 10 percent would go to the island’s municipalities—as a first step in a transformation of the Territory’s sales and use tax to a VAT or value added tax―a tax which would apply not just to goods, but also to services, except for health, education, prescription drugs, rent, mortgage payments, and utility payments. Junk credit-rated Puerto Rico faces a $191 million deficit in this year’s spending plan, and a nearing July 1 deadline by which to adopt its FY2016 budget. A planned sale of $2.9 billion of bonds backed by oil taxes hinges on achieving a balanced budget, a five-year financial framework and new revenue measures, according to its Government Development Bank: the Commonwealth and its agencies have $72 billion of debt. Lilliam Maldonado, a spokesperson for Puerto Rico House Representative Jesús Santa Rodriguez, said the revenue measures would bring in $1.5 billion per fiscal year. In addition, it appears there is growing consensus on other tax changes—plus some nearly $600 million in discretionary spending cuts. Despite the renewed effort between the Governor and key leaders in the legislature, the tentative, informal agreement faces a short time frame and any number of political obstacles—all pitted against a growing awareness that absent such extreme action, both the U.S. Territory and many, many of its cities could default. Thus, unsurprisingly, Senate President Eduardo Bhatia Thursday said: “May 14 will go down in history as the day that Puerto Rico began implementing a responsible budget.”