Finally…Something Better Than The Blues From Moody’s


Last week Acting Mayor Marty Maloney got some good news that he shared with Park Ridge taxpayers by a press release: Moody’s Investors Service issued a new “Credit Opinion” which removed the “negative outlook” from the City’s Aa2 general obligation bond rating.

For a City that had seen its bond rating downgraded from Aa1 to Aa2 back in January 2011 and stigmatized with a “negative outlook” – thanks to more than a decade of irresponsible borrowing and spending, and general mismanagement, under that trio of bumbling mayors Ron Wietecha (now of Barrington), Mike Marous (still of Park Ridge) and Howard Frimark (now of Harwood Hts.) – just stopping the slide was a major accomplishment that took a significant revision to the City’s financial philosophy to include “prudent austerity” and “reasonable – but not painless – tax and fee increases,” according to the press release.

As noted in the release, that new financial philosophy started with our late mayor Dave Schmidt, who in 2009 became the only adult in a room full of children effectively demanding Snickers bars and Skittles for breakfast, lunch and dinner. That earned him the nickname of “Mayor No,” of which he was justifiably proud because it distinguished him from the majority of his fellow City officials (and their predecessors) who were either too stupid or too selfish to understand and care about all the long-term damage such financial irresponsibility and debt was doing to the City, both present and future.

If you want a little more history on those points, you can check out our posts of 01.12.12, 01.30.12 and 07.25.13.

Schmidt’s vetoes weren’t always upheld, especially when a majority of the City Council consisted of holdovers from the Frimark regime. But the ones that were not over-ridden saved City taxpayers hundreds of thousands of dollars short-term, and will end up saving the City millions more if the policies and practices underlying them continue to be carried forward by present and future councils.

With the prospect of the City’s needing to issue tens of millions of dollars of new bonded debt to repair, replace and/or improve its infrastructure, stopping the City’s bond rating slide is a crucial first step to reducing the cost of that debt to the City’s taxpayers. And as Maloney was quoted in the press release:

“Our next goal is to raise the rating itself.”

That will require the continued support of the taxpayers “who have contributed the extra tax and fee revenues while accepting the various economies necessarily imposed on City services.” And maintaining that support will challenge both the brains and the spines of our elected officials, as it will challenge the vigilance of those taxpayers who don’t get back-end benefits from front-end tax and fee increases; e.g., City employees and their families.

As we’ve recently seen with our Fire Dept., City employees – like many/most employees in both the public and the private sector – will continue to expect more money for the same amount and quality of their work. Unfortunately, the market economics that manages such expectations in the private sector have pretty much become foreign to the public sector, especially in Illinois and even here in sleepy ol’ Park Ridge.

For example, senior bureaucrats find it much easier to support rather than resist their subordinates’ demands for raises because “salary compression” resulting from such raises provides a convenient argument for similar or even greater increases in compensation for those very same senior bureaucrats.

And even where those City (or school district, or park district, or Library) employees are also taxpayers of the unit of government that employs them, a $100 property tax increase is an outstanding bargain when it comes with a $500 or $1,000 raise.

The same analysis applies to those various private-corporation community groups who denounced Schmidt and the city councils that shut the spigot of tax dollars that had been flowing unaccountably to those groups year after year. Even the unpaid directors of those groups delighted in a $100-per-home (avg.) property tax increase that put $20,000 or more into their organizations’ coffers, thereby reducing their own funding and fundraising obligations.

And it also applies to certain “private” special interests as well.

Like those Mayfield Estates residents who bought their homes at discounted prices because of the flooding in that area – resulting primarily from their cheapskate predecessors’ rejection of the City’s request that they pay for the installation of storm sewers when that area was annexed, and from their or their predecessors’ expansion of their usable front yards by filling in the drainage ditches that substituted for storm sewers.

They’re the ones who show up at City Hall seeking a multi-million dollar bond issue and accompanying property tax increase to finance flood remediation in their neighborhood. That’s because they know full well that their $100/year-per-home tax increase will buy each of them $100,000+ of flood remediation, with a likely $100,000+ increase to the value of their residences if/when they want to sell them.

All of it is a variation of what we call “freeloading” practiced by “freeloaders”– our shorthand term for those residents who are always looking to leverage maximum benefits for themselves, their families and/or their friends by shifting the costs of those benefits onto the backs of their fellow taxpayers.

If that freeloader mentality continues to gain traction, we can all say ”goodbye” to Maloney’s goal of raising that Aa2 bond rating and say “hello” to the likely return of the negative outlook.

A/k/a, Moody’s blues.

To read or post comments, click on title.

4 comments so far

It’s great that the rating agency took away the negative outlook. Unfortunately, not only will some of the city expenses need to be reigned in, but the city will probably have to continually increase taxes with all of the infrastructure needs. It’s going to be a struggle to do this for an extended period of time. All taxpayers are going to start questioning is it truly worth living in Park Ridge for the community, schools, parks, library, etc., for the amount of taxes being paid. Perhaps with all of the new construction going on that will help to alleviate some of the tax burden.

EDITOR’S NOTE: Of course “taxpayers are going to start questioning is it truly worth living in Park Ridge for the community, schools, parks, library, etc., for the amount of taxes being paid”! THAT’s why we’ve been raising the issues of neglected infrastructure, mediocrity of our schools (which consume 70% of our property taxes), and the problems caused by freeloaders.

But if the new construction adds significantly more students to our public schools, it will add to rather than alleviate the tax burden.

Pointing out the intended and unintended consequences of public officials’ decisions is a service that nobody else in the local media even attempts to do. As a long-time Park Ridge taxpayer, I thank you.

EDITOR’S NOTE: You’re welcome.

A salute to the current city council for carrying Mayor Schmidt’s common sense fiscal conservatism and knocking out that negative outlook. And good luck to them in raising the bond rating.

Totally appreciate and agree with your comments about the late mayor, but also think it’s worth recognizing Alderman Knight for his leadership and discipline as F&B Chair. His commitment to getting the city’s finances in order ultimately help pave the way for the current aldermen to follow.


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