David Swindell, Arizona State University professor and director of the Center for Urban Innovation, wants to set the record straight about the Phoenix economy.
“Phoenix is doing fine and has taken a lot of actions to get there over the last couple of years with the biggest being wrestling with its pension debt like a lot of other cities,” Swindell told the Coconino News. “Phoenix is in a position now to address those issues and there’s no real threat. We run a tight fiscal ship without a lot of splurging.”
Swindell’s testimonial comes after a recent Truth in Accounting (TIA) study ranked the cities financial state near the bottom among the 75 most populous cities. In its final analysis, the government watchdog rated Phoenix No. 63, lumping it in a group it classified as not having enough money to pay their bills.
“I guess I’m challenging the methodology used to arrive at the numbers they did,” he said. “It doesn’t lend itself to transparency and is not explaining how they come up with these scores and how they derive numbers. The way public finance works is not the way they appear to be calculating these numbers. Long term debt is not something you pay in one full swoop. When you simply calculate expenses associated with future obligations, it can make you look like you’re in weak position, but that’s not how public finance works or how we do things.”
City officials have taken a similar position, telling local public radio station KJZZ, that "the premise of this analysis by TIA is that a city must have enough cash today to pay all future liabilities, both short- and long-term. This is not how debt and liabilities work in the real world. If you had a house mortgage of $250,000, the TIA methodology says you must have $250,000 in a checking account today to pay that bill. No city debt obligations are handled this way.”
Authorities also said current pension plan payments are like mortgage payments and are spread out over the next two-plus decades.
In the end, Swindell argues there are much more effective ways at reaching the kinds of conclusions TIA was digging for and making use of them would have meant a much different outcome for the City of Phoenix.
“It requires a much deeper dive,” he said. “This methodology can’t speak to the standard practices used by other organizations and academicians. The bottomline is I do not see the City of Phoenix filing for bankruptcy any time soon.”