Lubbock City Council Hears Complaints on Lubbock Economic Development Alliance, Gives Preliminary Approval to 2012-13 Tax Rate, Budget
16 people spoke at Thursday evening’s public hearing regarding the budget, and a number of them spoke out against LEDA’s choice to award Copy Craft Printers more than $200,000 in incentives to expand their business.
Some of those that spoke owned or worked for other printing companies in Lubbock, and felt that the incentives were unfair to the other printers.
Danny Stockton, president of Copy Craft, weighed in saying “None of these funds are to be paid unless we first do our part, and are subject to ongoing audits by LEDA.”
“It’s not LEDA’s job to engineer equal outcomes. Just to ensure equal opportunity,” Stockton continued.
Connie Cole with Craftsman Printers spoke as well. “Being with Craftsman for 18 years, I’ve seen our company grow. We didn’t go out and ask for help from the City or from LEDA. My boss is a good businessman; he went to his banker.”
Others from Craftsman Printers, Action Printing, and Parks Printing spoke out against the incentives, as did members from Beck Steel, who says they’ve been through something similar when LEDA provided incentives to Desert Tanks to come to the Hub City.
Some of the same people that spoke out against the incentives at Thursday’s meeting, voiced the same concerns last week as well.
LEDA CEO John Osborne touted the benefits of LEDA and Market Lubbock, including noting Lubbock’s recent ranking as 42nd in the leading locations for economic job growth in the United States, according to Area Development Magazine.
The Council also discussed the 2012-13 budget and tax rate, and Lubbock Power and Light’s position in the budget.
City Manager Lee Ann Dumbauld offered what she called a “stop-gap” alternative, to keep from installing an LP&L rate increase so early in this budget.
“We believe that a rate increase will be imperative in December, January, March, in that time frame. But we also believe that we need to get the fiscal year-end financial results so that you can make a good decision on that,” Dumbauld said.
Around $17 million remains unused in LP&L’s capital project fund, and Dumbauld’s plan is for LP&L to pay off at minimum $5.8 million in bonds take out around $10 million in new bonds at a lower interest rate, but fund the other $10 million in capital maintenance from cash reserves.
The utility would take out the debt in early spring of 2013, so it could be possible that they would not need to issue the debt at that point, depending on how LP&L does financially during the year.
Dumbauld says that this plan would have LP&L at the same point financially next year as they are currently.
“We were told two months ago they were going to move $7 and a half million, same song and dance we heard a year ago. Now we’re hearing from the board president and CEO that it looks like they will break even this year. That’s breaking even with $17 million in depreciation being booked,” Robertson said.
“This budget proposal that the staff has put together…I’m really concerned because I know the media’s here and they’re going to pick up on $10 million in new debt and that’s not an accurate statement. If we defease $5.8 million worth of bonds, and we take on an additional $10 million in debt, we’re at net $4.2 million additional…then if you’ll take the money that we were going to use paying the debt on these bonds, which nobody has considered, if we defease them immediately, you’ve got the bond payments that would have been made throughout this year that will also go to defease the other $4 million in bonds, and I’m assuming that’s around $3 million in bond payments…so now we’re at about $8.8 million in bonds that we can defease, and we’re taking out $10 million of new, but we’re defeasing bonds in the 4.75 to 5 percent range, and we’re taking out new bonds in the 2.75 percent range. That’s just good business,” Robertson continued.
The Council approved the addition of the LP&L budget reconciliation without a rate increase into the overall budget, and then considered the overall budget.
District 6 Councilwoman Latrelle Joy disagreed with portions of the budget and how it was calculated.
“What we do is some very creative accounting. That is, people who are in actually in administration are charged into other departments, and that makes it look better…the result is a skewing of the real expenses of administration and expenses of other departments, and the failure to trim or make cuts where they are dictated,” said Joy.
Joy’s entire explanation on why she did not support the budget is below.
The Council approved the first reading of the 2012-13 budget 4 to 3, Hernandez, Klein, and Joy in opposition.
The vote remained 4 to 3 with the same councilpersons dissenting for the 2012-13 tax rate of 49.211 cents per $100 home valuation, a 3.95 percent increase from the current rate of 47.4 cents per $100 valuation.
The final public hearing for the impending budget will be held at the Council’s next regular meeting on the evening of September 13th, where they will give final approval to the budget and tax rate.
Click here for more on the upcoming tax rate.