City council member and mayoral candidate Tim Burgess, citing tens of millions of dollars in unspent transportation dollars every year since at least 2008, has asked the city auditor to conduct a review of the Seattle Department of Transportation's capital investment program and its management of fund balances.
Burgess' move comes as the council's government performance and finance committee (headed by Burgess) prepares to consider legislation to issue new bonds totaling around $6 million to SDOT. Burgess says he won't consider issuing SDOT any more bonds until the auditor has determined why the department has spent at least half a decade sitting on millions of unspent funds.
Every year, city departments sells bonds to generate money to build things, like parks, road improvements, and libraries. The city pays interest on that money; when the money isn't spent, it costs the city more in interest.
While it isn't unusual for a department to end a year with some unused dollars, it is unusual for a department to spend year after year sitting on tens of millions of unspent money in its cash balance—which is exactly what SDOT has done. In 2011, SDOT closed out the year with $112 million in unspent bonding dollars. In 2012, SDOT's unused debt amount to $64 million. That's debt on which the city has to pay interest—a few percentage points, amounting to a few million dollars, every year, on money the city isn't using.
"We have legislation asking us to sell more bonds for SDOT-related projects, and we're saying, 'Whoa, if we've got $64 million at the end of 2012 sitting there that we haven't used yet, why would we want to sell more bonds?" Burgess says. "I'm just suggesting that we should pause and figure out what's going on. ... We save money when we don't sell bonds and we lose money when we sell bonds and we don't need the money."
Mayoral spokesman Aaron Pickus points to a new policy the mayor and City Budget Office announced last week (preemptively; Burgess has been talking about the problems at SDOT on the campaign trail) to "better manage the city's cash flow needs." Among them: New reviews by the budget office of city spending on a project-by-project basis; more stringent reporting requirements; and the use of the city's cash pool to pay for project contingency costs.
"This is something that the City Budget Office and the [department of Finance and Administrative Services] flagged" as needing to be addressed, Pickus says.
Beth Goldberg, head of the budget office, says the city "recognized there was a problem" with SDOT's spending back in 2011, and "dramatically scaled back the amount of bonds that we issued." Asked why SDOT, of all the city agencies that issues long-term bonds, had ended up sitting on so much money, Goldberg said SDOT was responsible for numerous megaprojects, including the Spokane Street Viaduct, whose budgets are very unpredictable from year to year.
Goldberg said the budget office (which is overseen by the mayor's office) is fine with Burgess' proposed audit. However, she adds, "The City Budget Office just completed an exhaustive review of every project for which bonds were issued," so she's not sure an additional audit is necessary.