What is fiscal responsibility and transparency? | Eastern NC Now

  Fellow citizens, here is a correspondence that I’ve had with a young man. He watched a few of my videos and is interested in this topic but isn’t convinced that the city did anything incorrectly or outside of their normal purview. He believes that I may be inflammatory and misleading in my messages. Here is our discussion. Please pass on your thoughts. (Concerning the first message, I at no point have said the city was running a deficit. But I am strongly opposed to their tax increase and the mountain of debt that they've accumulated during this administration).

Micheal: I’ve only spent a few minutes looking at the FY21-22 and FY25-26 budgets side-by-side and I’m not seeing what you’re purporting.

Both budgets appear balanced, meaning the city isn’t running a deficit. Also, the 25-26 budget notes a decrease in the property tax rate (I assume to offset higher property tax assessments).

Are you focusing on the increase in debt servicing from ~$1 million to ~$4 million in that span? I don’t live in Washington so I can’t say I’ve paid very close attention, but I’d imagine most of all of that debt service comes from bonds for long-term projects. More than a quarter of that ~$4 million comes from the electric fund alone.

Nick Fritz for City Council: Hi Micheal, it’s around page 10 and 13 of each report. Sorry, I can’t figure out how to attach a few pdfs to one response.

Micheal: so are you alleging financial mismanagement due to the fact that the city issued more debt for long-term capital projects than they bring in in revenue in a single year?

If so, that is very misleading framing.

Nick Fritz for City Council: no. A city council is like a giant home owners’ association. They exist for specific functions. When those in charge begin raising rates and plunging into debt to perform their functions, we as the paying citizenry may not be happy about it. I am unhappy and think they are not doing a good job. That is my allegation and my opinion. If enough of the concerned citizens of this community agree with me, I’ll be elected to take the council in a different direction. If they think things are be handled well, they will re-elect the current crowd. I’ve run many organizations and had many run for me… I think this organization is being run poorly. Do you have a different opinion? Let’s meet and chat!

Micheal: I don’t think that’s an apt framing, either. A city council has its general expenditures - the “keep the lights on” upkeep/maintenance kind of things. It also has to undertake massive multi-year projects like building or renovating schools or updating stormwater infrastructure. What alternative are you proposing here? That the city should have to pay for those massive, longer-term projects upfront? How does that get done without raising taxes?

Nick Fritz for City Council: what is not apt? City councils don’t build schools.

There are two alternatives to paying for “large” projects: budgeting and paying or borrowing and paying.

I am proposing the former.

Michael: I don’t disagree with the spirit of fiscal responsibility you seem to be promoting but there’s a reason borrowing for expensive, long-term projects is the norm in municipal finance and a Government Finance Officers of America best practice:

- It helps spread out the financial burden to avoid massive spikes an inconsistencies in tax rates that would be needed to budget for paying for projects upfront

- It distributes the financial burden across generations so that today’s taxpayers aren’t footing the entire bill for infrastructure that’ll benefit those to come.

- There’s an opportunity cost to tying up a significant portion of today’s funds for expensive projects.

- It allows for quicker access to funding so projects can start and finish sooner.

Nick Fritz for City Council: the first reason you note is to avoid financial spikes. This administration passed a 28% tax increase.

I can’t speak to the benefits of debt. I know that the nation has millions of college students who have been sold that line. I’ve had a number of friends whose business went bankrupt with that philosophy. I know of many banks and public companies that went bankrupt with debt. I know of many municipalities that went bankrupt with debt. None have gone bankrupt by avoiding debt.

If this city wants to bear the burden of this debt they will vote in this council again… but I think the community who foots the bill should be informed of the debt that this administration took on.

Transparency begins with bringing all the facts to light and discussing them openly. I welcome these discussions. If debt is what’s in our best interest, let’s talk about it and agree upon it as a community.

City councils are not kings or aristocracies. They are representatives of the community; of the community will. Once they are not, they should be replaced by more aligned representatives.

Micheal: I agree that an informed, engaged public is a good thing. Transparency is a good thing. All I’m trying to point out is that you framing the city council as financially irresponsible because they took on reasonable debt to fund projects is like labeling an individual as bad with money because they have a mortgage and a car loan, even if making the payments on those loans are well within their means.

I just hope you took away from this conversation that issuing debt is very normal for a municipality and not inherently irresponsible.

Also, is that 28% tax increase your final answer? I saw another video of yours where you threw out between 30% and 50% as the number.

Nick Fritz for City Council: Comparing personal debt to public debt is problematic. Your personal decisions are your own. When you are in charge of other peoples money you must play by stricter rules. A much closer analogy would be if you gave me your check every week for me to manage your money and I took a fee. After a year you approached me and inquired how things were going. I said fine with no further explanation. On your own initiative, you discovered that I had increased my fee by 30%, and that I had taken out loans equivalent to your annual salary. Does this seem fiscally responsible?

At the end of the day, those elected to handle our best interests have made decisions that are contrary to the will of a large percentage of people. I’m blatantly telling you these facts and you struggle to verify them and you’re an interested party. This is NOT transparent governance. It is not fiscal responsibility with other people’s money.

Just because something is common (like municipal debt) does not make it fiscally responsible.

Concerning the variance in the tax increase, the average increase across 6600 homes was 28%. Some experiences a tripling in their valuation. Others experienced minimal increases. Those who are the most incensed experienced the largest increases.

For those who want to personally contribute more to local government taxes, I invite them to write the check. No one is stopping them. I don’t appreciate five short-term elected officials committing the other 10,000 residents to a tax increase to fund $20M in debt that they were never informed about.

Our local government is “ours”. We quite literally bear the burdens of these decisions. And I do not agree with those that have been made. I do not agree with the financial commitments that have been made in my name without the slightest desire for my input or permission. I cannot cancel the debts incurred, but I can attempt to streamline the current expenses and slow down the draw from mine and my neighbors’ pockets. Those are my opinions and my intentions. I am broadcasting them as loudly as possible.

I appreciate your dialogue. I hope others follow along because the more I can speak, the more clearly my message and intentions will be.