If you followed social media after the recent one-notch credit rating downgrade from Fitch Ratings, you saw City leadership in full-on meltdown mode.
If you aren’t locked into the daily turns of the City of San Antonio’s financial position, here is a quick recap. It’s important to note that the other two credit rating agencies, Moody’s and Standard & Poor’s, reaffirmed the City’s AAA bond rating while Fitch downgraded the City one notch to AA+. This downgrade has no effect on the City’s current debt load and won’t result in increased taxes. The core reason identified for this downgrade was the voter passage of Proposition C, granting binding arbitration for our firefighters in their contract talks with the City.
We all need to get a grip, take a deep breath, and be patient. We must also be painfully honest with ourselves about what our City stands for and what really needs to be fixed. Here is the truth bomb: For the last nine years, we have secured a AAA bond rating, the highest municipal “credit score” available. It is the signature accomplishment of City Manager Sheryl Sculley and touted by Councils past and present as our saving grace.
Problem is, the AAA bond rating isn’t all its cracked up to be. Why?
For all the hype over those same nine years, while our credit score was rising and reserves growing, this City also grew in a few other key economic indicators. Most notably, we became the most economically segregated City in the nation. The marginalized became more so. The same streets and sidewalks that were in poor condition in 2005, are for the most part, still in disrepair. Wages are almost stagnant, and the same people and families who were struggling at the beginning of Sculley’s tenure and AAA focus are still struggling today. So I ask you, who was the AAA bond rating actually for?
Yes, we have benefited from better interest rates. Yes, it is a significant financial accomplishment, and many previous bond packages have saved money because of it. But has the typical San Antonio family, in neighborhoods some City leaders have never set foot in, changed at all? The fact is, they haven’t, and it’s hypocritical and evidence of a severe political blind spot, to watch mostly privileged San Antonio residents clutch their pearls over the bond rating “credit score” and the effect on citizens, when the credit score hasn’t done a thing for the people who need the help the most.
Some folks need to shelve their righteous indignation and take a hard look in the mirror. The AAA bond rating says a lot about us, and to the Wall Street fat cats and investment bankers, it’s the gold standard. But to me, it also says our priorities at City Hall are broken.
It’s a manufactured crisis that allows us to ignore the other glaring problem we have and that’s the fact that too many in our community are missing out on the City’s financial strength. I’ve seen families on the West Side struggling to make ends meet and hustling two or three jobs for just a little extra for the kids. I can imagine them looking at media coverage of the bond rating and asking themselves where all this financial success is when they can’t earn a living wage or get their sidewalks fixed. So don’t stand there and act like the sky is falling when hundreds of thousands of folks aren’t looking at the same sky you are, my friends.
We need significant change at City Hall, not just in our financial game plan, but in our priorities. Our bond rating is important. We need to be vigilant and fiscally responsible, but we also need to be realistic about our mistakes.
At the top of that priority list is the completion of the firefighters labor contract. This one-notch downgrade by one rating agency isn’t due to a uninformed public. It isn’t because of one vote in November, regardless of which side you chose. This was years in the making and can be traced back as far as the breakdown in police and fire labor negotiations four years ago, leading to broken trust and years of ill will that culminated in these charter amendments.
If Fitch’s analysts said binding arbitration scares them, then let’s get back to the table and finalize this contract. Both sides have to put aside political – and in some cases, personal – animosity to get this done. We can make Prop C irrelevant and demonstrate to all three rating agencies that labor peace between the City and its first responders exists, contracts are completed, and financial controls are in place for the largest expenditure we have in our budget.
And from there, we can make the right hire for city manager, bring continuity to the City machine, and look to the upcoming municipal elections to chart our future. The voters spoke in November. They’ll get another chance in May. Until then, let’s act like leaders, be resolute, and not scare the community with forecasts of doom and gloom.
The voters spoke and demanded change. Now let’s see how we react.
All change is good if you own it and examine why the change is necessary. This is our chance to get our priorities right.