City may borrow more to meet payroll

By JAMES MITCHELL
Sunday Times Newspapers

TAYLOR — City officials remain confident that financial solvency will be reached through a state-approved five-year debt elimination plan, although City Council Chair Cheryl Burke said that continued municipal layoffs and internal borrowings indicate that things may seem worse before getting better.

“We need to get through the debt elimination, and the borrowings are inevitable,” Burke said. On April 2 council approved a 1 percent-interest loan of $3 million from the water and sewer fund to make May and June payroll during a tax-revenue lull. A motion made during last week’s meeting to borrow an additional $6 million, which was tabled pending several study sessions this week.

Burke said the motion will likely be approved no later than May 7, as the cash-flow situation dictates, and that additional layoffs remain possible. Earlier this month city administration laid off one staff member, consolidated another position and transferred an employee as belt-tightening continues.

“We’re again restructuring and reassigning work. We’re at a pretty much bare-bones staff right now,” Burke said. “We’re trying to avoid cuts in police, and we don’t want to reduce the number of officers.”

In lieu of additional revenue streams, City Council this week begins budget preparations for the 2013-2014 fiscal year tasked with trimming 20 percent of an estimated $5 million deficit. Doing so will allow the city to continue operating under a five-year deadline for eliminating its debt. Failure to maintain the state-approved conditions could result in state emergency or financial management.

Approval of the five-year plan was reached earlier this year after numerous sessions held with state financial advisors. Taylor’s quest for stability encountered several set-backs when previously unidentified shortages surfaced that Burke said generated additional cuts and reductions.

“We have to address some shortcomings that the state called our attention to,” Burke said. “We thought we had left no stone unturned, and now we’ll do it again.”

Burke and Mayor Jeffrey Lamarand had said that municipal borrowings from one fund to another is a common practice, one that recently was revised by state law to require more transparent accounting. The longtime problem of declining revenues and increasing employee costs left the city with no other option during periods between tax collections.

“The borrowings are to keep up with cash flow,” Burke said. “If we had a fund balance, which we don’t, we wouldn’t have to do that. The goal is to eventually accumulate a fund balance.”

(James Mitchell can be reached at jmitchell@bewickpublications.com.)

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