More info from last Thursday's City Finance Committee Meeting.
The $2 MILLION "loan" that new City Administator Tony Cox has said that the City must have in order to meet its everyday operating expenses came up. Tony Cox turned the explanation over to Brian Janish, City Budget Director. Click here for Cox's February 11 financial presentation to council and his proposal to get a $2 Million loan to make payroll and pay debt and other expenses through June 30, 2010.
On February 25, Janish said that the city needs to borrow between $2-$4 MILLION to meet its budgeted expenses (payroll, debt, etc) for the remainder of the fiscal year.
Janish added that the city needs to be able to access at least $2 MILLION of these borrowed funds by April 1 with the extra $2 MILLION as a line of credit that is available as, or if, needed.
Since all previous discussion was about a $2 MILLION short-term loan, Kay Senter asked about the extra $2 MILLION that Cox and Janish want as a line of credit.
Janish replied that the extra $2 MILLION is being requested so it can be in place if there is a need without the city having to go back and start another loan process.
Also, for the first time in public, Janish mentioned that the loan/line of credit would include the Sewer Fund in addition to the General Fund. That is an interesting development, but no councilmember asked why the Sewer Fund is being mentioned now in connection with the loan/line of credit.
[In the past three years the Sewer Fund has had excess cash that has been used by the General Fund to meet General Fund operating expenses. What has happened to the Sewer Fund?]
Jinks asked how repayment would be made in six months. Janish said that "after WE borrow the money," it will be up to YOU seven councilmembers to decide how to pay it back.
Janish and Cox then said it will require, drum roll please, "Revenue Enhancements!"
"Revenue Enhancements" is polite political code for "we messed up, now taxes and fees have to go up again."
How were things messed up? Let's look back.
Historic 40-cent property tax increase in the City in 2007. Click here.
Desperate push for sales tax increase in 2008 with a 15-cent rollback in the 40-cent property tax increase. Click here (Feb 2008 countywide sales tax increase defeated) and here (City came back with a city only sales tax referendum that passed).
Big sewer fee increases one after the other. Click here and here.
Council passes 2010 budget in summer of 2009 after City Administrator Jim Crumley recommends cuts of $1.7 Million. Click here.
Crumley canned despite Frank McGuffin's vote against the firing and Mayor Barile's protest that Crumley was being "railroaded." Click here.
Interim Administrator Lynn Wampler comes in and tells Council that they are on the road to bankruptcy (my word) and that the budget that they passed a few months before is a disaster.
Wampler and Council make additional cuts of $900,000 to stave off or at least postpone a deficit situation. Click here.
Mayor Barile admits that the City had no money in reserves (no rainy-day funds) in 2007 and that she and the Council were just becoming aware of this and a lot of other stuff. Click here.
Tony Cox comes in as City Administrator, looks at the finances, and says on February 12 that the City needs to "borrow" at least $2 Million for the General Fund to be able to meet its operational expenses, to pay its debts, and to make it to June 30, 2010, the end of the fiscal year. Click here.
Then on February 25, 2010, Cox and Janish say that the City needs to borrow $2-$4 MILLION for the General Fund AND Sewer Fund--most of which will be used between April and June 2010 and the balance of which will be a line-of-credit "just in case."
How bad could the city's budgeting be if the City can not make it to the end of the fiscal year (June 30, 2010) without a $2-$4 MILLION dollar loan?
How can the City add huge amounts of additional taxes (property and sales) and additional fees (sewer) to its budget over the past 2-3 years PLUS make large budget cuts in the summer of 2009 and then more budget cuts in November 2009 but still can't make it to June 30, 2010, without a $2-$4 MILLION loan and line of credit?
Someone from way outside the tight-knit group needs to come in and see what's going on now and what went on in the past.
The budget that the Mayor and Council passed in June 2009 was nothing but a joke on the citizens and taxpayers. Who has to pay for this and the prior budget jokes? The taxpayers, of course.
Look for additional property taxes, new garbage fees, and/or increased stormwater fees---all under the name of "revenue enhancements." And there will be a few cuts, too, so the City will have "cover" to announce that we have looked at everything and made all the cuts we can.
Mayor and Council to taxpayers: Sorry for the mismanagement, but we still have a Wish List and a Master Plan. We have walking trails to build, brick pavers to lay, lots of chrome to buy, and a beautiful cage right in front on the City Center for bad signs! Now pay up.