Blog Archives

Viewpoint: Phoenix budget woes, big art, light rail made ’09 quite a year

[Source: Arizona Republic; section headers organized by yours truly] — With this being Christmas week, we figured you wouldn’t want to read a traditional editorial any more than we wanted to write one.  So today, we lighten things up a bit with awards for notable achievements in 2009.

Phoenix Overall

  • Story of the year: Phoenix did the virtually impossible this year — it cut $270 million from the general fund to balance the budget due to low sales-tax revenue.  Residents are feeling the effects with reduced hours or closures of swimming pools, libraries, and senior centers.  They also see more graffiti and potholes because staff is stretched so thin.  Now the city is talking about cutting an additional $100 million or so.  This story is getting old.
  • Best cheerleader: Mayor Phil Gordon earns this award again.  With frequent trips to Washington, D.C., to lobby for stimulus funds, and Janet Napolitano resigning as governor to lead Homeland Security, Gordon is the face of Arizona.
  • Embarrassment: Rep. Ray Barnes’ rambling reasons for voting to cut $144 million from public education.  Grab some eggnog and watch this Phoenix Republican go off.
  • Hot potato: The idea to raise the sales tax temporarily to generate revenue quickly.  Mayor Gordon suggested a community member take on his idea.  But no one wants to touch it.
  • Landmark: The city became the second in the state to offer a domestic-partner registry to gay or straight couples who share a Phoenix residence.  Among other privileges, the registry grants partners visitation rights in hospitals.
  • Pillar: City Manager Frank Fairbanks earns this award again.  He retired this year, but not before balancing the nastiest budget deficit in city history.  Thanks, Frank.

Downtown Focused/Strong Influence

  • Pushin’ on: Light rail has its fans and its foes.  But ridership is up and businesses have sprouted along the line.  The system is approaching it first anniversary.  We say light rail is on track.
  • Newcomer: Janet Echelman’s “Her Secret Is Patience” at the new Civic Space Park downtown opened to much criticism.  Meant to resemble a cactus bloom, the floating sculpture was called everything from a basketball hoop to a male contraceptive.  Not that we mind.  Some of the best artwork in the world drew heavy criticism.  We’re just glad people are noticing what downtown Phoenix has to offer.
  • Comeback: Phoenix Urban Market Grocery and Wine Bar at Central Avenue and Pierce Street is the first grocer to serve the area in 30 years.  It only carries the basics.  But milk, vegetables, bread, pasta and other staples are welcome.
  • Bragging rights: President Barack Obama made three visits to the Valley this year.  One of those was to the new Phoenix Convention Center, where Obama addressed the Veterans of Foreign Wars national convention.
  • Feather in the cap: A budding knowledge-based economy, parks and preservation efforts, and teen spaces at public libraries make Phoenix an All-America City.  Now it has the civic award to prove it.  This was Phoenix’s fifth win.  It would be a shame to lose these gains to budget cuts in the down economy.

Other Parts of Phoenix

  • Senseless act: A photo-enforcement-van driver was shot to death while deployed near Loop 101 in north Phoenix.  Thomas DeStories was indicted in connection with the shooting death of Douglas Georgianni.
  • Tallest story: Despite opposition from neighbors, the City Council approved a Mormon temple whose steeple and spire will rise 86 feet above the Deer Valley area.
  • Unsung hero: The Macehualli Day Labor Center in northeastern Phoenix provides a central location for day laborers and potential employers to negotiate business.  The center is for sale.

Despite mayor’s optimism, downtown Phoenix feels real estate, consumer stress

[Source: Mike Sunnucks, Phoenix Business Journal] — Phoenix Mayor Phil Gordon extolled the economic resilience of downtown Phoenix [last] week during this annual “State of Downtown” speech.  Gordon said Arizona State University’s expansion of its downtown campus, construction of the mixed-use CityScape project, and the light rail system are helping the area. He also said while sales tax revenue is down citywide, it is up 13 percent in downtown Phoenix.  “Yes, it’s been a tough year economically for everyone.  You’ve heard all about it, read all about and felt it,” Gordon said.  “But in spite of it all, we’ve still got a lot going on in downtown Phoenix.”

Notwithstanding the mayor’s optimism, downtown Phoenix faces some economic problems.  High-rise condominium developers face questionable financial futures because of troubles with pricing and occupancy.  The Hotel Monroe redevelopment at Central Avenue and Monroe Street remains stalled, and the boarded-up building has become a haven for pigeons.  The total amount of vacant space in downtown Phoenix stands at 1.05 million square feet — up from 630,400 square feet in the first quarter of 2007, according to Colliers International.  The downtown vacancy rate is 13.8 percent, compared with 8.5 percent in first-quarter 2007, according to Colliers.

Downtown also is feeling the effects of pulled-back consumer spending.  A number of downtown businesses have closed because of the recession, including Weiss Guys Car Wash at Grand Avenue and Van Buren Street and the China Inn restaurant at the Colliers Center.

The two downtown pro sports teams also face economic challenges.  The Arizona Diamondbacks had a poor season on the field and drew about 381,000 fewer fans than in 2008, according to ESPN.  The Phoenix Suns have gotten off to strong start on the court — but, like other sports teams, they face hurdles in attracting and keeping fans during the consumer doldrums.  [Note: Read the full article at Despite mayor’s optimism, downtown Phoenix feels real estate, consumer stress.]

Moody’s lowers ratings outlook on City of Phoenix to negative

Phoenix City Hall

[Source: Wall Street Journal] — Moody’s Ratings Service lowered its ratings outlook on the city of Phoenix, Arizona, to negative, citing ongoing revenue declines and expected tax-base losses in the city, which will weaken its credit profile.  Arizona’s largest city, and the fifth most populous in the U.S., is in the midst of a severe recession that began with the housing crisis and now includes most other sectors of the economy.

Unemployment has been less of a burden in the city, reaching 8.7% in July, compared with 9.5% for the state and 9.7% for the nation.  But a weak job market combined with the potential for more foreclosures means many consumers in the area will severely limit their discretionary purchases well into 2010, Moody’s said.

The ratings agency said that, despite the city’s efforts to maintain fiscal stability during the recession, the outlook cut reflects Moody’s expectation that finances will remain under pressure for the foreseeable future, given those broader economic concerns and uncertainty about the region’s next economic expansion.  Moody’s has Phoenix at Aa1, which is one notch under Aaa.  The outlook change affects about $2.4 billion of debt.

Earlier this month, Moody’s lowered its ratings outlook on Arizona’s Aa3 issuer rating, which is three notches under Aaa, to negative.  The ratings agency cited similar concerns about revenue underperformance.  Despite those concerns, once the housing market levels off, Moody’s said Tuesday, Phoenix will resume its above-average long-term growth due to its high-skill office jobs and high-tech manufacturing sector.  The city continues to develop a number of revitalization efforts, including a convention-center expansion, light-rail construction, and development of a downtown campus for Arizona State University.  Moody’s said those efforts and ongoing population increases should help the city recover at a faster rate.  [Note: Read the full article at Moody’s lowers ratings outlook on City of Phoenix to negative.]

Residents disapprove of plan to cut downtown Phoenix rec center’s hours

[Source: Jahna Berry, Arizona Republic] — The city’s plan to close Verde Park’s recreation center nine months a year will increase crime in the Garfield neighborhood, residents said.  Those residents joined about 300 people who packed a room in the South Mountain Community Center earlier this week. Most were there to voice their concerns about a proposal to cut $270 million in city services and programs.  Phoenix faces the $270 million shortfall because consumers have drastically cut back spending, hurting the sales tax-dependent city’s general fund.  That fund bankrolls key city services like parks, police, and libraries.

Proposals to reduce recreation-center hours, a plan to eliminate after-school programs and a proposal to shutter five senior centers drew the most fire from residents.  Without places to go, some kids will turn to crime, said Guillermo Barreras, 15.  “I need a place were I can go during the day,” said Barreras, adding he often goes to the recreation center at Verde Park at Ninth and Van Buren streets.  [Note: To read the full article, click here.]

Viewpoint: Phoenix will rise from the ashes

[Source: Kit Stolz, Guest Contributor, Grist Magazine] — During a session called “Sustainability and Growth: How Can a City Develop Sustainably When its Identity is Built on Growth?” at the American Meteorological Society convention, a development expert named Grady Grammage colorfully dispelled some myths and revealed some little-known truths about Phoenix.  One myth: Phoenix is unsustainable because it imports water.  Virtually all cities import water, Grammage pointed out, even New York, not to mention countless other necessities for urban life, such as food, fuel, and steel.  Phoenix arguably has a more stable supply of water than numerous other cities, such as San Diego, because Phoenix imports its water from numerous sources, albeit at great distances.

In Grammage’s view, a bigger question is “habitability,” and he brought up the Urban Heat Island Effect, which he thinks, based on surveys, will drive more Phoenicians out of the state by 2020 than those who move in from other states.  Grammage reports that when he expressed this view, various public officials and “water buffaloes” — water experts — in Phoenix scoffed.  They think Phoenix could support as many as 10 million people — more than twice its current population.

But the climactic trends may have already been trumped by the economic trends.  According to a huge and thoroughly-substantiated front-page story in the Arizona Republic, Phoenix is already losing population — thousands of people — probably due to the economy.  Foreclosures are up a mind-blowing 534% from last year, while water hook-ups, trash collection, and sales tax revenues are all down sharply.  Substantial numbers of buildings have no water service, indicating abandonment, and sales tax revenues are down 8%.  Even crime has declined.

Already, the Phoenix city government has to try and close a 22% revenue gap of about $270 million, and if the state finds that the city is losing residents, it will cut its allocation of tax returns still further.  Perhaps this is why the mayor, Phil Gordon, scoffed at the reports of population decline. “The growth of Phoenix, like all cities in the Valley, has slowed significantly.  But Phoenix’s net growth is still positive, both in jobs and population,” he said.

Cognitive dissonance, anyone?  Or, is it just garden variety denial?  In any case, something is in the wind… as reflected in a sign I saw this morning in an empty storefront in downtown Phoenix.  Guess we’ll find out what kind of wind it is soon enough.

Hundreds pack meetings to protest proposed cuts in Phoenix

[Source: Scott Wong and Sadie Jo Smokey, Arizona Republic] — Some offered ways Phoenix could save money. Others said they were willing to pay more taxes and fees to preserve critical services.  Troubled by the city’s proposed budget cuts, nearly 700 residents packed the Devonshire Senior Center on Tuesday to urge city leaders to spare arts and after-school programs, libraries, senior centers, parks and public transit.  Hundreds more voiced concerns at public meetings at the Maryvale and South Mountain community centers during a day that marked the first chance for residents to weigh in on the widespread cuts.  The huge crowds illustrated the anxiety residents are feeling as the city prepares to slash $270 million because of the national recession and dwindling tax collections.

More than 400 people, many leaning on walkers and canes, spilled into the Devonshire auditorium in Phoenix.  When it was full, officials directed the overflow crowd to the dining room, where a second, impromptu meeting was held.  “Phoenix should not be allowed to deteriorate the way it did in the 1960s and 1970s,” resident Hal Stahl said. [Note: To read the full story, click here.]

Phoenix budget hit harder than other big cities’

[Source: Scott Wong, Arizona Republic] — Phoenix’s $270 million in proposed budget cuts are the largest in city history.  And although the national recession has forced almost all local and state governments to pare back spending, Phoenix’s reductions are among the most severe of any major U.S. city when comparing total budgets.  Plagued by the dismal economy and plunging sales-tax revenue, Phoenix is being forced to carve more than 20% out of its $1.2 billion general fund to bridge deficits in the current and next fiscal year.  Services Phoenix residents use on a frequent if not daily basis — libraries and parks, senior centers, and swimming pools — are bearing the brunt of the cuts.

Other large cities such as Los Angeles, Chicago, and Philadelphia are bleeding red ink, too, and are expected to slash many more dollars than Phoenix in the coming year.  But an analysis of the nation’s 10 largest cities shows that no spending decrease rivals the 22.5% in cuts now being weighed by Phoenix.  [Note: To read the full article, click here.]

Phoenix is losing residents, signs say

[Source: Michael Clancy and Casey Newton, Arizona Republic] — For the first time in modern history, Phoenix’s population could be shrinking.  It’s an idea that would have been unimaginable just a few years ago, when Phoenix was surging up the list of the nation’s most populous cities.  Now, a variety of indicators suggest that fewer people are living here than a year ago.

No one knows for sure exactly how many people have moved in or out.  But with the 2010 census about to get under way, some indicators suggest Phoenix’s population may be smaller than the projected 1,636,170 people.  City records show declining trends in several key areas.  Among them:

  • Foreclosure numbers have skyrocketed, meaning fewer city homes are occupied.
  • Water hookups are down, suggesting the same.
  • Some aspects of trash collection have ebbed because fewer people are buying things that produce waste.
  • Crime has declined across the city while police are getting fewer calls for services, a possible indicator of fewer people.
  • Sales-tax revenues are likely to drop for the second year in a row, with this year’s collections off almost 8% from last year.

[Note: To read the full article, click here.]

Grinch economy wrecking havoc with Phoenix city budget

[Source: Scott Wong, Arizona Republic] — Phoenix leaders received an unwelcome gift just before Christmas: Word that the city’s budget shortfall could be as much as $20 million worse than previously expected.  And with tax-collection figures for the bleak holiday shopping season still unknown, the record budget gap could grow even wider than this week’s $260 million to $270 million projection.

In September, Phoenix officials had pegged the estimated deficit at $250 million, or about 20% of Phoenix’s $1.2 billion general fund, which pays for police, parks and other basic services.  “Clearly since September, the economy has continued to deteriorate,” said Deputy City Manager Ed Zuercher, who oversees the budget department.  City sales-tax revenue from January through October was about $330 million, $20 million less than was collected during the same period in 2007.  [Note: To read the full article, click here.]

Budget crisis prompts Phoenix City Hall voluntary worker furloughs

[Source: Scott Wong, Arizona Republic] — Phoenix City Manager Frank Fairbanks told city employees on Thursday that they have the option to take unpaid days off through Dec. 31 to help the city save money.  Voluntary furlough days reduce an employee’s take-home pay and annual wages.  Supervisors are being encouraged to approve the days off as long as they don’t interfere with city business. 

“I am proud that our employees and unions are looking for innovative ways to assist their co-workers and our community by reducing the budget deficit during this difficult time,” Fairbanks wrote in an e-mail to city employees.  His announcement comes as Phoenix prepares to slash an estimated $250 million, or more than 20%, from the budget because of the sagging economy and declining city tax revenues.