Photo courtesy City of EL Paso
A crisis is a terrible thing to waste. On the upside, it can help make our priorities clearer, relax rigid rules or regulations and give civic leaders the opportunity to be more accessible and transparent. Or it can just be a cover to do unpopular things with fewer consequences and a lot more opacity.
The COVID-19 pandemic has diminished our confidence in our elected officials from the national level on down. The serious economic inequities in our country are laid bare and our faith in our economy is badly shaken as millions are left without a paycheck.
Communities across this state have been hit hard. As leaders plan for recovery, will they commit to addressing inequities or just hide the results of decades of poor stewardship behind a genuinely unprecedented emergency? In El Paso, we have our answer. City staff propose making vicious cuts to services they don’t value and blame it on the pandemic.
Last year the city’s chief financial officer said the city was not producing enough new revenue to keep up with rising operating and management costs and debt service obligations. His solution was closing libraries and pools. This was widely unpopular at the time and it was not followed up on. But, the idea was still on the table for future budget shortfalls.
How did we get to this place? When the city ended its fiscal year on Aug. 31, 2019, it reported an ending fund balance of $356.4 million, an increase of $64.0 million compared with the prior year.
At mid-fiscal year, Feb. 28, 2020, the city had collected 96 percent of its projected property taxes and 51 percent of its projected sales tax revenue. These are the city’s two biggest revenue sources. Overall the city had collected 70.32 percent of all revenues. Revenues less expenses increased the fund balance by $104,472,604.
On March 13, 2020, the governor declared a state of disaster and two months later the city has run out of money, requiring that library, museum and recreation program staff to be furloughed for as long as two years, according to both the city manager and CFO.
Meanwhile, city staff persuaded City Council to defeat a proposal to suspend construction of the 2012 voter-approved bond initiative to build a multipurpose and performing arts and entertainment facility and a cultural heritage center. Two council members supported the action because it could diminish the future financial impact of COVID-19 and reduce future costs of debt burden on the city.
Despite the fact that the cost of servicing the city’s debt is the second largest outlay of funds in the current budget year, the council was persuaded by the sunk cost fallacy to defeat this proposal. The sunk cost fallacy also explains why the city covered operating losses for the Butterfield Trails Golf Course from 2008 until the end of this month, when it was no longer possible.
Since you can’t furlough debt service, the city must limit other spending each year. The contradiction of being unable to pay for what we have, yet adding to our debt burden, doesn’t seem to register. Our quality of life is measured by the black box theater we don’t have or need, rather than by the libraries, museums and recreational services that we do have and need but can’t be bothered to sustain.
The state and its cities are retrenching. Yet across Texas communities are working on plans for phased reopenings of libraries, recreation centers and museums. These communities are braced for cuts but are restoring, to the best of their abilities, the services taxpayers count on, appreciate and enjoy.
Our city’s mission is to deliver exceptional services to support a high quality of life and place for our community. Are we there yet? Whose quality of life has been improved?.
By Rosemary Neill
Neill is affiliated with the El Paso Community First Coalition. Her data source is the latest edition of the city’s Comprehensive Annual Financial Report for the year ending Aug. 31, 2019.
The author invites readers to “dive into the data.”