Monday, January 25, 2021

Community Voices: EuroZone Debt Crisis Offers Financial Lessons for Coronado

Residents following the European Sovereign Debt Crisis (EuroZone Debt Crisis) know it offers valuable financial lessons for Coronado city. Coronado officials who mask city debt and deny the existence of our city’s massive off-balance-sheet debt are acting against the best interests of our residents and taxpayers.

The most important lesson we learn from the Eurozone Debt Crisis is this:

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Live within your means.

The next lesson is this:

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In economic crisis, someone has to pay.

. . .

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Do the above government failures and systemic shortcomings sound familiar to you? They sound familiar to me because the same things are happening in Coronado. As a professional and an attorney who focuses on the facts and the law, I’m assisted in my role as City Councilwoman to protect and improve our city finances by applying to Coronado the lessons contained in the fact pattern of the ongoing EuroZone Debt Crisis.

. . .

Coronado officials set our city up to fail financially when they focus primarily on the annual budget planning documents, and pass multiple unbalanced budgets with deficits while denying that the deficits exist. Coronado officials mask Coronado’s debt when they fail to reasonably consider during decision-making and fail to disclose to Coronado taxpayers — for whatever reason — our massive off-balance-sheet debt. Coronado’s off-balance-sheet debt includes:

  • our total $232 million redevelopment debt (located here in our city’s self-reported, mayor- and council-approved current Recognized Obligated Payments Schedule, which is the official statement of our redevelopment debt broken down into line items), plus
  • our approximately $100 million debt to the city employee pension program (otherwise known as our “unfunded pension liability”).

Intentionally missing opportunities to make the right financial choices and to inform the public about the reality of financial situation under our legal duty of transparency will end in financial failure for our town. Like the EuroZone Debt Crisis teaches us, Coronado will come to a bad financial end if our city continues in this wrong direction of denial, masking debt and refusing to consider off-balance-sheet items when making decisions that affect our city finances.

If you’ve been following our city council meetings and the electoral campaigns over the past few years, then you know that I’ve been the sole leader in advocating for a tighter fiscal policy in Coronado with a more prudent and forward-looking approach to risk management because it’s clear that our business as usual is harmful to Coronado residents and taxpayers.

As you may know, in order to raise public awareness I’ve been speaking publicly and consistently over the years about our need to reign in our spending in a variety of ways, eliminate city government waste, and pay our debts. However you may not know that also I have:
  1. Had the conviction to vote against overspending and waste of taxpayer dollars on a variety of issues affecting our finances since I was elected to council in 2009 because I always vote in the best interests of Coronado taxpayers, even when that means not voting along with the crowd.
  2. Used my council leadership, worked six months, and avoided increasing our total off-balance-sheet debt by bringing about the proper end result in 2011 that our city didn’t add tens of millions of dollars of additional redevelopment debt. In brief, my leadership and hard work thwarted the ill-conceived plan of our city manager, our mayor and our council members to burden all Coronado taxpayers with additional non-voter-approved, redevelopment bond debt as the last grab before the state legislature put an end to redevelopment abuse in 2012. This plan to issue more redevelopment bonds, without ballot approval by our voters, was not only unknown to the vast majority of Coronado residents. It was also unwise because, among other things, it wasn’t a bond issuer’s market. In other words, in addition to other reasons, it wasn’t a good time to raise money for our city by issuing certificates of debt (bonds) because interest rates were incredibly high and Coronado had no realistic way to secure a lower, reasonable interest rate.
  3. Used my council leadership this year to make the motion, which was seconded and unanimously approved 5-0, to pay $5 million toward our city’s unfunded employee pension debt, which is one of our off-balance-sheet debts.
  4. Hosted several SPEAK OUT CORONADO Town Hall meetings since 2010 where the public has gathered to discuss our city finances, including our off-balance-sheet debts, in order to increase residents’ knowledge and understanding of our city finances . . .

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