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Evanston taxpayers could eventually save as much as $4 million a year if the city shifted to making more of its purchases with current revenue rather than bond debt.

Assistant City Manager Marty Lyons, who proposed the shift at a strategic planning meeting with aldermen Tuesday night, conceded that the savings would be tiny to begin with — but said they gradually would rise to that $4 million a year figure by two decades from now.

Lyons said the city should split its capital spending between “pay-as-you-go” and debt-funded projects.

He said one candidate for the pay-as-you-go approach would be water and sewer mains. Individually they have a very long life, but some need to be replaced every year.

And more facilities mantenance and ongoing upkeep projects could also be put on a pay-as-you-go basis, he suggested.

Only major one-time facility renovation or replacement projects — with an expected lifespan far longer than the 20-year bonds used to pay for them — would still be funded with long-term debt under this plan.

The change, he suggested, would eventually allow the city cut its bond debt payments in half — from the current level of about $20 million a year to less than $10 million — while spending less than another $10 million on pay-as-you-go projects.

If the change isn’t made, he said, funding all projects through bond debt would add an extra $4 million in interest payments to annual city tax bills by 2034.

The idea drew enthusiastic support from a council budget hawk, Alderman Coleen Burrus, 9th Ward.

“Thank you, Marty,” Burrus said. “I think pay-as-you-go is the responsible way to handle our debt going forward. It will help us get out of the serious crisis we’re in now.”

Aldeman Jane Grover, 7th Ward, added that said the city needs “more coherent debt policies.”

When the meeting facilitator, consultant Jean Bonander, asked whether the group favored the “pay-as-you-go” approach she got head nods around the table, and the same response when she asked wether they favored reducing the city’s reliance on debt financing.

City Manager Wally Bobkiewicz said the city could start building a pool of money for pay-as-you-go projects by investing one-time revenue toward that goal.

He said building permit fees and real estate transfer tax revenue has been higher than expected this year and could provide some start-up funding for the shift.

But he said the change would also likely require either trimming the amount the city spends on general operations to create the pool of capital project cash — or raising additional revenue from taxes and fees.

Bobkiewicz said he’d return to the council in December or January with some more specific proposals, and, assuming aldermen approve those, would include those concepts as part of the community engagement process for preparing the city’s 2015 budget.

Bill Smith is the editor and publisher of Evanston Now.

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3 Comments

  1. It is about time!

    Wow! It is about time Evanston starts being responsible and only spending what we have and not what we don't have on projects.  It takes planning but every family in Evanston does it.  BRAVO "pay-as-you-go"!

    1. Pay as you go – increase taxes more as you go

      Be aware – read the fine print in their memo – they are talking about tax increases versus holding spending in check.  They discuss fees and other forms of revenue.

      I spoke and told them to cut unnecessary spending, and the mismanagement of their projects.  The Mayor last night claimed they need the new water tank versus just a roof replacement as recommended in the consultants report, $ 26 million versus $ 4 million.  ( why would they do this? appears NU wants it moved?)

      Question what if they borrow and not even use pay as you go that is a 20% increase to the water rate – we are not talking about this year's 10% increase.  Try pay as you go for $26 million given current fees are around $7 million – what going to happen to your water bill – remember the other customers most likely pay.

  2. Understand why this has not been done already

    If you ask the city council if they want to see a savings of $4m a year 20 years from now they will say "of course".  It is simple, borrow less now to have less interest charge later.  But now they have to eat their vegetables.  They have to come up with the revenue NOW to replace what they would otherwise borrow.  That will be painful, and the benefit does not come until the distant futre.

    That means either cutting spending or raising taxes or fees.  The reasons this was not done long ago have not gone away, so it will be hard to do it now.  It is a good idea, but not as easy as the article makes it seem.

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