CAPE GIRARDEAU PILES UP HUGE DEBT

Over the next 20 years, the city's $64 million in debt will be retired in the following manner:

User fees, $29.8 million

taxes, $16.5 million

debt reserves, $6.7 million

street assessments, $4.8 million

sewer connection fees, $2 million

general fund revenues, $1.5 million

State Revolving Fund subsidy of interest rate on some bonds, $1.27 million.

sewer assessments, $787,474

water assessments, $639,406

Source: City of Cape Girardeau

The city will have piled up debt of more than $100 million by next year, and most of it came during the past decade.

That figure includes about $40 million in interest and principal costs for the $25 million sewer improvements that voters approved in April.

The bonds won't be issued until next year.

Former city councilman David Barklage and former mayor Gene Rhodes are concerned about the rising debt.

But other current and former city officials insist the debt has been a wise investment.

Bond issues have financed street, water and sewer improvements that have helped the city grow, they say.

Barklage said the increase in debt has been enormous.

In 1984, when Barklage became a councilman, the debt was less than $1 million, he said. But today, with the $25 million sewer bond, "we have over $100 million in debt in financing and principal."

Cape Girardeau's total debt as of Friday stood at just under $64 million, excluding the yet-to-be-issued sewer bonds.

The city is slated to pay off the current $63.9 million debt over the next 20 years.

But Finance Director John Richbourg predicted the city will recycle its debt as new projects come up rather than eliminate it.

The interest and principal debt amounts to more than the entire city budget, which is about $47 million.

More than 70 percent of the debt, some $46 million, is being retired with user fees and taxes.

"What we have now is manageable," Richbourg said. "We just need to be prudent when we issue debt."

A decade ago, interest and principal obligations totaled less than 5 percent of the budget, Barklage said.

All this debt has to be retired, either from fees or taxes, he said, adding: "It's not a balanced budget when you can go out and debt finance yearly."

Barklage and his colleagues on the city's charter committee want to require the city staff to issue a debt statement with the annual budget and also prior to any bond election.

Barklage believes citizens, and even council members, are unaware of the size of the debt.

He said he was unaware of the rapid growth of debt during the eight years he was on the council from 1984 to 1992.

But the growing debt came as no surprise to Rhodes.

The bulk of the city's principal and interest debt, about $53 million, is in the form of two types of revenue bonds.

Rhodes said that as mayor he was concerned about the growing number of bonds issued through the city-controlled Public Facilities Authority.

The council approves issuing leasehold revenue bonds, which are retired through street assessments, taxes and fees.

The city makes lease payments to the authority, which in turn makes the bond payments.

The authority is directed by a board comprising council and city staff members.

As of Friday, the outstanding principal on Public Facilities Authority bonds totaled nearly $24 million.

All of that debt has been incurred since 1988.

"We are using the facilities bonds too much and we are spending money too foolishly," Rhodes said.

Barklage said, "Debt is a concern because it is not something that easily goes away."

Debt, he said, is a relatively new issue to city and county governments.

"The federal government for so long paid for capital improvement projects and now in the last decade cities have had to finance them."

Barklage said the real question is how much debt is too much.

Interest rates have remained low in recent years, making financing costs less expensive. But if rates climb, citizens could face significantly higher user fees.