debt management overview presentation to board of estimates august 29, 2011
TRANSCRIPT
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Debt Management Overview
Presentation to Board of EstimatesAugust 29, 2011
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Debt Management Considerations
• Legal constraints -- state constitution and statutes; federal tax law; municipal ordinances.
• Long-term assets – sharing costs and benefits of current investments with future generations.
• Public good – investments in support of safety, efficiency, effectiveness and economy.
• Sustainability – impact of debt repayment on overall budget and revenue capacity.
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Bond Ratings and Debt Structure
• City’s GO Debt rated Aaa by Moody’s
• Rapid repayment of principal over 10 years (most communities use 20 year bonds, but have lower bond ratings).
• 15% reserves (average of Aaa municipal issuers is 25%).
• Strong financial, debt and budget management.
• Strong economic base.
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Overall Debt
• Primary Government Debt = $467.1 million
• General Obligation Debt = $319.9 million
• Share of Personal Income:– 2001 = 2.93%– 2010 = 4.56%
• Per Capita:– 2001 = $1,012– 2010 = $2,047
2010 City of Madison Comprehensive Annual Financial Report 4
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Total Debt ComparisonsCity Personal Income Per Capita Year
Milwaukee 2.31% $1,374 2008
Waukesha 3.23% $1,832 2008
Green Bay 6.97% $2,381 2007
Eau Claire 4.40% $1,496 2010
MADISON 4.56% $2,047 2010
From Comprehensive Annual Financial Reports
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Per Capita Comparisons
Wisconsin Taxpayer Alliance data
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Per Capita Rankings
Wisconsin Taxpayer Alliance data
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Key Capital Budget Issues• Continuous replacement and refurbishment of city’s
infrastructure.
• Reconstruction of major streets and other facilities first built in 1960’s and early 1970’s as city’s population and area expanded.
• Services to more recent peripheral development.
• Expanded use of information technology and efficient equipment.
• Economic development investments.
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Replacing 1960’s Infrastructure
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Increased Investments in IT
Hardware and software only; excludes consulting costs
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General Obligation Debt as Share of Equalized Value
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New Debt Compared to Retired Debt2005 through 2011
[General Fund Supported Borrowing]
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General Fund Debt Service Share of Levy Increase2002 to 2012
Since 2001, levy estimated to increase 68% (from $110.6 million to $185.4 million) and debt service estimated to increase 72% (from $20.7 million to $35.6 million).
estimated
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Adopted Capital Budgets2000 to 2011
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Change in Authorized GO Debt2000 to 2011
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Change in Actual GO Debt2000 to 2011
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Allocation of GO Debt
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2000-2017 General Obligation Borrowing
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Future Trends
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Points to Consider• Use of debt has increased over the past several
years.– Infrastructure pressures– Greater use of technology– Low interest rates
• Pressure on city revenues due to debt repayment will increase.
• Future debt authorization will need to be carefully managed in the context of:– Other city services– Level of intergovernmental revenues– Growth in the city’s economic base.
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