Mayor: $80 Million in Bonds is the Right Amount
At City Council's Tuesday budget hearing, Pittsburgh Mayor Luke Ravenstahl defended his plan to borrow $80 million for use in the city's capital budget over the next two years.
The mayor said that the time to borrow is now because of low bond interest rates and a great need for upkeep of the city's roads, fleets, and buildings.
City Council Members had expressed concern that the mayor's budget aimed to borrow too much, but Ravenstahl said that the city has fallen $17 million behind on maintenance and must now make larger investments to catch up.
The mayor said that the city's department heads actually requested much more than $80 million in capital spending.
"Our needs are far greater than [$80 million], but our capacity to spend much more than that is limited," said Ravenstahl. "So, while we could spend more than $80 million over the course of the next couple years in theory, our capacity in terms of manpower and just simply time wouldn't allow us to do that."
Ravenstahl said that he's confident that the city will be able to spend $42.5 million next year, and the remaining $37.5 million in 2013. The largest single expenditure would be for street resurfacing, for which the mayor budgeted $10.3 million. Other substantial capital investments would include $7.5 million for new public safety vehicles and $4 million for building maintenance.
Pittsburgh Finance Director Scott Kunka said that the city's debt service payments are scheduled to drop from $90 million per year to $30 million per year in 2018 — dubbed the "debt cliff."
"While $90 million may be unsustainable as an annual debt service figure, $30 million is probably too low for the infrastructure needs that we have, so it's going to be some combination thereof," said Kunka.
The capital budget will receive a preliminary City Council vote tomorrow, and will likely see a final vote Monday.