Ahumada to propose new bond issue

Brownsville Mayor Pat Ahumada says a new bond issue may be inevitable if any major road improvements are to be undertaken. However, voters would have to approve the measure in a referendum.

In his recent State of the City address, Ahumada proposed a bond issue for capital improvement projects, such as extensive street and drainage improvements.

But he hasn't put the pencil to it, he said Wednesday.

It depends on the community's "wish list," he said, which would be developed through planning, discussions, and public hearings.

"The finance director said we could sell $18 million the first year and $35 million afterwards," Ahumada said of the amounts that could be sold in bonds.

"Debt is part of doing business. We may be more prone to issue debt (than other cities), but that's OK. The cost of money is cheap right now. I would rather go in debt and build now (than later)," the mayor said.

If it were not for increasing sales tax revenues and income from fees and services, the city could find itself in a bind in paying off current debt, according to the budget. About 50 percent of the city's property tax revenue goes to pay off debt.

The city generates roughly $34 million in property taxes, but about half is applied to debt while $17.7 million goes to the general fund to meet maintenance and operation costs.

Projected sales tax revenues for this fiscal year total $24.6 million and that coupled with nearly $17 million that the city receives in fees and services comprise the majority of funding for maintaining and operating the city, public records show.

Commissioner Leo Garza said that if a bond issue was the only way to conduct a comprehensive and extensive street and drainage project, then he would support it.

Garza said that the Texas Department of Transportation left the city holding the bag and now it has to find ways to complete the Morrison Road project.

He also pointed to the condition of Pablo Kisel Boulevard, from the area of the Blue Shell Restaurant to Alton Gloor. "It's breaking up pretty bad," Garza said.

He also pointed to West Elizabeth and McDavitt streets, which also are in need of extensive reconstruction.

"Where are we going to get the money for that?" Garza said, noting that the commission already, "cut and cut and cut," the budget this year.

"If a bond is the only recourse, I will support it because we need to address the problems we have," Garza said. "There are no two ways about it. We can't continue to neglect the streets and drainage," he said

"I don't know of any other route."

City of Brownsville general obligations bonds debt service requirements:

- The city's debt dates from 1986 through the present.

- The city will be paying roughly $16.2 million this fiscal year in principal and interest toward its debt. This represents about half of the roughly $34 million that the city generates in property taxes in a fiscal year.

- The city's balance of principal outstanding on general obligation bonds alone is $153 million and it will have paid $229.2 million through 2027 in interest and principal, records show.

SOURCE: City of Brownsville 2008 fiscal year budget.