CHICAGO - The Columbus City Council last week approved Mayor Michael Coleman's $1.1 billion capital budget for 2008, including $790 million for sewer and water upgrades that will advance the Ohio city's ambitious $2.5 billion project to address all outstanding sewer environmental compliance issues.
The spending plan is a 34.5% increase from last year's $818 million budget.
The city would finance the budget with roughly $770 million in general obligation bonds, loans from the state, and carryover money from last year's budget.
The council's approval of the budget paves the way for the triple-A rated city to make its annual trip to the market later in the year. Columbus typically competitively issues a series of unlimited and limited tax general obligation bonds once a year to finance a variety of capital projects, and this year expects to enter the market in November, said debt coordinator Rob Newman.
The budget includes roughly $871 million in new-money projects, with the remainder of the projects rolled over from last year's budget. The biggest chunk of the package is $790.1 million slated for the public utilities department, including $553 million that would finance sewer upgrades and $202 million for water upgrades.
In January, Columbus sold $359 million of new-money, fixed-rate revenue bonds to launch its 40-year, $2.5 billion project to update its sewer systems to meet Environmental Protection Agency requirements. That debt issue is included in the 2008 capital budget, which is retroactive to the beginning of the city's fiscal year, Jan. 1.
Under the current capital budget, the city will return to the market later this year to issue roughly $411 million in GO bonds, including about $195 million earmarked for the next stage of the EPA plan. As the city puts together the final bond proposal, it will analyze each department's budget to cut out unnecessary funding, Newman said.
"When we get ready to issue the bonds, we contact those divisions to make sure they actually need those dollars," Newman said. "The big assumption in this whole budget is if we are going to issue what [the department's] total budget is, and we normally don't," he said.
While utility projects dominate the 2008 spending plan, a $42.3 million chunk of funding is set aside for public safety projects, and a $60.5 million piece is slated for the construction management division. That money would largely be used to fund various street improvements and other transportation projects, said officials.
Columbus has a total of $1.58 billion of outstanding GO debt, 74% of which matures within the next 10 years. The city has a total of $435.6 million of outstanding sewer revenue bonds.
The utility bonds are backed by user fees, while the remaining debt is backed with income tax revenue. The city sets aside one quarter - or 0.5% - of its 2% income tax rate for debt service on those bonds, Newman said.
The budget does not include a $2 million line item Coleman requested to fund engineering studies on his recently announced plan to construct a new electric streetcar line in downtown Columbus.
The $103 million project, which would partially be funded through new fees and taxes in the downtown area, attracted a flurry of criticism from residents and council members at hearings on the budget, and the mayor last week asked the council to withdraw the $2 million earmark until he could address voters' concerns. But Coleman said he remained determined to move forward with the proposal, which he said would launch a "transportation revolution" in Columbus.
All three rating agencies assign a triple-A rating to Ohio's capital city. Analysts cited itsdiverse economy, which is anchored by a large governmental base that helps it withstand economic fluctuations. Columbus also benefits from the presence of Ohio State University, which is the largest single-campus university in the U.S., with a student population of around 52,000.