Now that the City of Albuquerque has successfully defended its construction of a river trail in the Bosque, it appears that Mayor Berry’s Administration is planning to begin construction on a far more ambitious and costly project. According to news reports, the City of Albuquerque is looking to begin construction of the $100 million bus rapid transit system down Central. This despite the fact that the City “hasn’t secured most of the estimated $100 million needed to building the project” according to the report. An astonishing 80% of that money is supposed to come from the federal government, but $20 million is no small potatoes and there are operating costs to be concerned with as well.
I attended an open house on this issue last summer, but have heard virtually nothing from City Council in terms of votes or allocations of funding.
And then there is this from Moody’s, the bond rating agency which came out earlier this month (Feb. 9, 2015):
Moody’s revised the negative outlook on its Aa1 rating of Albuquerque to stable in April 2014. We are skeptical that the city will retain its high-grade credit ratings over the intermediate term absent corrective action. Our greatest area of concern is the city’s pension liability. In its April report, Moody’s estimated Albuquerque’s adjusted net pension liability (ANPL) at USD 1.86bn, or 3.53x operating revenues, and noted that the average for the sector was below 1x.
Furthermore, according to Moody’s:
We expect Albuquerque’s unfunded pension liability to trigger more anxiety among credit analysts in the years ahead. In August 2014, Moody’s Analytics described the city as an economic “laggard” within New Mexico and in the west generally. Weak employment trends are the principal culprit. The government sector is a leading component of the economy (key employers include Sandia National Laboratory, Kirtland Air Force Base, University of New Mexico and the US Forest Service) but is not growing measurably. Any further cutbacks in military spending could represent a downside risk.”
In other words, Albuquerque’s economy stinks and it is too reliant on Washington (tell me something I don’t know). The City needs to reform its pension system and improve the local economy or see its credit rating decline, thus driving up the cost of borrowing and further increasing taxes.
Instead of tackling these nasty problems, our City is contemplating spending $20 million or more on a new bus system that will have a dubious impact on overall mobility and could negatively impact (both temporarily and in the long-term) businesses along Central.
HT: Dave Bruner