Politicians
claim we can improve our fiscal health by promoting more development. When the
red ink turns up we are told to “grow ourselves out of debt”. And when asked how, the same voices invoke
the sobriquet of “smart growth”.
Whether we really can “grow out of debt” is another matter and whether
our growth has been “smart” or “dumb” is also up for contention. Smart growth has become a buzzword, loosely thrown
around by developers, but it does have a real meaning. For one it signifies that development is
commensurate with the fabric of a neighborhood; next, it means that growth does
not overpower the capacity of a neighborhood to absorb new residents; and, it also
means that new development does not mar or exhaust the immediate
environment. Not the least, a central
component of smart growth is its cost efficiency and whether it deepens our
fiscal hole. We should consider whether our
current growth really has been smart and question assumptions about “growing
out of debt”.
Let’s
look at what we do know about Alexandria’s budgets and its development. Over
the past decade budgets have tracked upward.
With the exception of the great fiscal crisis during the years 2008-2009,
debt service has moved upward along with recent development (calculated as the
value of new construction). The table
below shows that pattern.
The solid line shows mounting budgets, beginning at
a modest $521 million just ten years ago and rising to well over $625 million as
of last year. Development also rose from
$480 million to $546 million. These statistics tell us that increased budgets
are associated with the dollar value of new construction (development). Digging more deeply, we know from the numbers
that 18 percent of the city’s budget can be accounted for by new construction. Development
does incur costs. For every million dollar increase in
development we have a corresponding rise of $180,000 in budgets. Even more important, debt service has risen
over this period from 8.4% of the budget a decade ago to 12.7 percent by last
year. The simple fact is that Alexandria
is in the midst of rising budgets, rising development and rising debt
service––all occurring together.
This is not necessarily bad. Supporters of the “grow out of debt” theory would
point out that population and business have also increased; that debt service
is still a small proportion of Alexandria’s assessed property values; and that
increased expenditures are investments in the future. They would be right on the first count and
largely misleading or irrelevant on the others. For one, the question is not only whether
our tax base has increased, but whether those increases lagged behind
expenditures. Second, increases in
assessed properties also mean higher taxes.
The issue here is not whether Alexandrians can handle higher taxes, but are
we willing to incur the costs of growth.
Third, all this begs the greater question of whether our current pattern
is an investment in the future or a disinvestment in the real assets of our
city.
Certainly, growth can be good if it is done smartly,
but it can be bad when done dumbly. Smart growth means that we should examine
every stick and brick about to be constructed to determine whether it really
adds value to the city. Budgets that
grow without enhancing capital infrastructure or improving services should be
suspect. Increases in the proportion of
budgets consumed by debt services should be worrying. Even on these points we are not simply
dealing with numbers but with quality of life.
21st century congestion choking 18th and 19th
century streets does not make for a better city; nor do modern buildings that block
sunlight and obstruct waterfronts help us.
Most especially for Alexandria, the relationships between numbers and
quality of life are interdependent. We
should not make the mistake of believing we can compromise our quality of life
without this coming back to haunt our fiscal health.
____________
Hank Savitch is Emeritus
Brown and Williamson Distinguished Professor of Urban & Public Affairs at
the University of Louisville and a Visiting Fellow at the Metropolitan
Institute, Virginia Tech. He lives in
Alexandria and can be reached at hvsavi01@vt.edu
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