Salisbury, Be Warned – the City's Debt Limit Could Be Removed Soon!

At this week's work session the City Council will consider a proposal by the Ireton administration that would vitiate the City's debt limit – not by repealing it, but instead by changing how it would apply in the future. If a particular debt obligation provides for payment from any of the so-called enterprise funds, such as those for parking facilities or the sewer and water systems, that amount would not be counted towards the current debt limit.

A memorandum by the City’s treasurer ("Director of Internal Services") states that the current debt of the enterprise funds that would be eliminated from the total limit is almost $54 million – more than half of the total debt limit. The memo also reveals why this shenanigan is being proposed: "to pursue finalizing the MDE loans planned to fund the Wastewater Treatment Plant upgrades scheduled later this year." In other words, the city can't borrow enough money to fix the "new" sewer treatment plant because of the current debt limit, so something must be done. Since raising the debt limit would be unpopular and this is an election year, simply change how it operates.

But that's not the only reason for the proposed change. There would be no meaningful limit on the City's debt, because any obligation could provide that it is to be paid from one or another enterprise fund, including that new one – funded by the "rain tax" – for stormwater that Ireton and Jake Day just pushed through. To gain needed funds to pay the debt, the related charges to the public such as sewer and water charges and parking fees or, in the case of the rain tax, property owners, could be increased by any amount at any time. And if an appropriate enterprise fund does not already exist, then it can be created.

This is a foolhardy manner by which to solve the City’s problem of the moment, and the situation is being used to remove an effective and absolute limit on the City's debt. That will surely result in unrestrained borrowing for spending, leading to greater debt and increases in the city's taxes and fees. City residents and property owners would be wise to oppose this change, both loudly and forcefully. If they don't block it, they deserve its inevitable consequences.

Now that you've been warned, do something.