Financial security is the bedrock of our community. If we cannot keep our finances in proper order, we aren’t able to provide essential services or deliver on any of the aspirational priorities we’ve identified. When we make decisions, we must make sure we evaluate those decisions to assess their real financial impact.
We weathered the Great Recession reasonably well, with a high (AA+) credit rating, because we were judicious and cautious with our use of debt to fund long-term capital projects. I’m glad we did that. As we consider new debt, I believe there has to be either a dedicated income stream to pay for the debt or a solid plan to pay the debt off without passing on the cost to future generations.
Ann Arbor’s economy is strong, yet we face and will continue to face challenges. Currently, we project that the long-term cost of our current services will increase by an average of 2.5% per year. Assuming our tax base remains stable, we project that our long-term revenue will increase at 2% per year. We cannot reduce expenses without service cuts; Simply maintaining our current level of services requires us to grow our tax base.
Treading water isn’t good enough: we also need to make investments for the future. As we’re budgeting and planning, we need to weigh proposed expenditures and evaluate their impacts on our future quality of life. Capital infrastructure projects like the upgrade of the wastewater treatment facility and the needed upgrade of our drinking water treatment facility are investments in our future. Improving the condition of our roads is an investment that is essential for residents and businesses. Investing in alternative transportation – public transit and non-motorized transportation – will improve the quality of life in Ann Arbor. These are investments that we should be making, investments that we have to figure out how to fund. I believe that we can only commit ourselves to recurring expenses that are tied to recurring revenue sources, and we should only provide services that we can sustain.
I believe that we can maintain our levels of service and meet our quality-of-life aspirations. Indeed, Ann Arborites expect the City to provide progressive quality of life improvement and high-quality basic services. To be able to do that, and to provide more affordability and social equity, we need to expand our tax base. We can grow in a way befitting the character of our city, but it will take work across philosophical boundaries to balance growth and preservation of our community character. I’m committed to finding that balance.