Pay-as-You-Go Vs. Bond Issues

This November, voters will be asked to approve a special tax for a $67-million bond issue so the city can buy new fire safety and paramedic communications and dispatch equipment.

The financial wizards at Los Angeles City Hall are hoping that the focus will be on the need for the new equipment, which is without question, and not the true costs involved, which are outrageous.

The cost of the communications system is $52 million.

The bond issue will cost taxpayers a total $84 million because of extras; $5 million for contingencies, $7 million for reserves, $3 million for initial payment, and $17 million for interest.

The $84-million measure will require a property tax increase of $10 million a year for eight years, then $2 million for the last two years.

Taxpayers will pay $84 million for a $52 million item!

I suggested a voter-approved special tax to pay for the system on a pay-as-you-go basis, avoiding the tremendous financing costs of bonds.

At $10 million a year, a $52-million system could be paid for in just over five years. The $27 million saved could pay for additional police protection.

In 1975, at my recommendation, voters approved a $40-million special tax for new fire stations on a pay-as-you-go plan for 10 years. That saved taxpayers about $20 million.

I believe they would have approved a special tax under a pay-as-you-go plan again, if given the chance, but I was outvoted.

As I said, the equipment is needed. It has been urgently requested by the Fire Department since 1981. The total budget increased from $1 billion to almost $3 billion since then as the council provided funding for a wide variety of pet projects, while ignoring the Fire Department’s long-standing request.

Had we started on a pay-as-you-go plan in 1981, the fire equipment would be bought and paid for by now.

The way the financial wizards at City Hall see it, adding $27 million to the cost through bond financing is no big deal, as long as the taxpayer is picking up the tab.

I cannot support a measure that needlessly inflates the cost and places an extra tax burden on property owners for five years longer than necessary.

My guess is that voters won’t support it either.

ERNANI BERNARDI

Councilman

Los Angeles