The City of Truth or Consequences, in the current fiscal year, has added nearly $11.6 million more principal-and-interest debt, which accounts for more than a third of the long-term debt that was on the books June 30, 2019, when the last fiscal year ended.
The figures are compiled from the City’s financial statements in the year-end audit and subsequent loan documents approved by the City Commission.
According to the Government Finance Officers Association, in its publication “Benchmarking and Measuring Debt Capacity,” many cities decide how much debt to carry by considering their population’s size and median income per capita.
The GFOA recommends that cities pass debt policies that limit debt.
One such policy cities put in place is limiting the “debt burden” to 6.5 percent to 10 percent of the median income per capita, the GFOA said.
Truth or Consequences, according to the U.S. Census, was estimated to have a population of 5,753 people in 2019, with a per capita income of $23,449.
The GFOA said debt burden should include principal and interest for loans and bonds, compensated absences, landfill closure debt, net pension liability and net OPEB or other post-employee benefits.
Adding those City debt heads from the year-end audit, the figure came to $20,312,750 as of June 30, 2019. Adding the new principal and interest since then, $11,579,460, the current total is $31,892,210.
Therefore the debt burden for each of the 5,753 residents comes to $5,544 in Truth or Consequences.
Since the median per capita income is $23,449, the debt burden is 23.6 percent of the per capita income, well over the recommended maximum 10 percent. In fact, it is nearly 58 percent higher than recommended.