Built by the city, this money pit takes regular maintenance to control

Debt can be a useful financial tool, for cities as well as individuals. But we’ve got to be smart about it.

Let’s say a family wants to buy a house. Most people don’t save up hundreds of thousands of dollars for a home then pay the full purchase price in cash. They put some money down, take out a mortgage, then pay it back over 30 years. That’s smart debt.

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But let’s say the new homeowners don’t take care of their house. Let’s say they put off regular home maintenance and when problems arise, they either ignore them or fix them as cheaply as possible. When the ceiling leaks, they don’t tend to the aging roof and loose shingles where the rain seeped in; they just plunk a pot under the drip. They spackle cracks along the wall but ignore the increasingly catawampus foundation that caused them. They hang a new wreath on the door but don’t bother touching up the chipped paint around the windows where the wood is slowly beginning to rot.

In a few short years, these homeowners will be shelling out big bucks for a new roof, new piers, new beams, and new window casings — none of which would have been necessary had they just made smaller, smarter investments along the way.

Cities, like houses, require regular maintenance. When a city doesn’t regularly invest in its streets and parks and fire stations, it ends up spending a lot more money on major overhauls down the road. This “deferred maintenance” is a problem in Dallas, and it has become a vicious, expensive cycle.

Here’s how this plays out at city hall: Over the years, the city allocates less and less of its annual operating budget for street maintenance. A street that should have been resurfaced is instead patched temporarily. Potholes accumulate until the situation becomes dire. Now the street must be totally rebuilt. But there are no funds to pay for something expensive like street reconstruction, so what can the city do?

Dallas City Hall’s answer has been: Borrow the money.

The problem is that this starts the city on a debt spiral. The city borrows the money to rebuild the street, but it’s got to pay back the debt. The debt repayment eats into the already scarce operating budget dedicated to street maintenance, leaving the city with less and less money to spend on regular street repair.

Hence, deferred maintenance keeps getting deferred. And we have to keep borrowing just to keep up.

It’s like the neglectful homeowners, using credit cards to pay for their expensive new roof. If they couldn’t afford to make modest improvements to their roof before, now they’ll have an even tougher time, as their monthly credit card bill eats into more and more of their income.

This is a tough cycle to break once it starts, and it takes discipline and time.

The city will be coming to voters next spring asking us to approve a bond program that will allow the city to borrow around $800 million, a large chunk of which will be used to pay for major street improvements. The city council is evaluating moving Dallas toward a “pay as you go” model, so that we would borrow less and less, and also pay back less and less in debt service, and then use the savings to fund the regular maintenance we’ve been ignoring.

No doubt Dallas needs to move away from deferring maintenance on its infrastructure then playing catch up by digging deeper and deeper into debt. But we also shouldn’t make the mistake of treating all debt as bad debt. It’ll always be smarter to borrow money at a low interest rate to pay for major capital investments like citywide flood control upgrades or major street reconstruction, than to wait years to save up hundreds of millions of dollars and pay cash for those investments.

Debt isn’t the enemy. It’s a useful, cost-effective tool. The City of Dallas just has to learn to use it correctly.