The city of San Carlos has a budget surplus and is deep in consideration on how to spend this money. Without hesitation, I would recommend applying the $9M toward their unfunded liability. This would reduce the unfunded amount and provide an opportunity to reduce the principal amount further, by maintaining the current payment by applying the new delta to the unfunded principle. The downside to this is that paying the debt would reduce the city’s ability to use fear of loss of service and staff reductions to ask for more tax increases.

In this time of increased revenue because of a strong economy, the action by San Carlos could be an exemplar for other cities with unfunded debt.

Bob Krainz


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