I considered writing up the board of Mayor and Aldermen Workshop and Meeting, but I’ll be honest- I’ve been exhausted and anything I wrote up could have possibly been full or errors and half-truths, and my promise to all of you readers is that I will shoot you straight even when the news is bad, even if it is not popular.
And this is not good news. I watched the conversation about this in the workshop and then I went up to City Hall and I talked to Phillis Rogers, the city’s AMAZING Finance Director about it myself. Phillis tells me that the months between October and January are always fairly tight months for the city. Taxes start coming in around the end of January, first of February (someone correct me if I’m wrong there- Phillis told me the exact dates and I forgot).
So, barring a miracle, the city will likely run out of operating funds around mid-November. No, it’s not because of filling vacant positions. No, it’s not because of “capital improvements” and it’s NOT because of the Old Timer’s Festival, tornado sirens (vote tabled at the last meeting, so they’re not spending any money on that), or ballfield lights (no longer even in the budget).
Each year between October and January the cash flow for General Fund gets really tight. This year it will be worse due to the fact that we’ve moved some debt service from other funds because those funds are not receiving enough revenue to support paying bond payments. I just received an invoice for one of the upcoming bond payments due and payable on October 1st for approximately $600,000. Our cash balance today is $1.6m. I anticipate that balance to be around $1.2m by the time we pay the $600,000. After paying bond payment we’ll be at approximately $600,000 and still have two to three months to go until Tax revenues come in. I am 99% sure that we will not have enough cash to operate with by late November early December.
In case you’re wondering what bond payments are, they are basically a loan that the city gets. It issues bonds, and pays them back according to a schedule. An example of what Phillis is talking about up there on the moving debt service from other funds, would be that way back in the day when developers were king in this town, the city depended on housing permit money to pay these specific bonds.
Well, fast forward to today and nobody’s building anywhere, much less La Vergne, and lo and behold, those funds have to come from somewhere else.
Now, before the panic hits that city employees aren’t going to get paid and the crap’s going to hit the fan and ohhhhhh noooo! Don’t worry. Phillis, who I have already said is amazing- has a solution. It’s called a TAN or a Tax Anticipation Note. It’s a way for cities and other governments to help out in a cash flow crisis. It is a short term loan that must be paid back before the end of the fiscal year. Phillis says this is the first time since she has been with the city (a surprisingly long time, Phillis projects a very youthful demeanor) that they have had to do this, and she states that she believes that since the taxes were raised, it should be the last.
Now, this sounds scarily like the cash advance loans, you know, write a check for $230, get $200 and then they cash the check on payday? Scary expensive rates? Apparently not so for governments, the short-termness of the loan, the fact that they bid it out, and the ability to draw on it as needed instead of just taking a big hunk of money, makes the interest rates not scary-expensive.
But still. I wish that had not been something that had to be done. Besides the debt service issues, there have been a whole lot of unbudgeted for expenses, cars going kablooey and needing expensive repairs, water lines going kablooey, sewer lines, well, you get the picture. That stuff is expensive.
Well, it is what it is. But there’s the accurate, straight story from me to you.
UPDATE- I talked with Alderman Broeker who wanted to clarify a couple of things:
The city nearly ran out of money last year on a couple of occasions. I do not remember the exact dates, but Phillis could probably tell you. It has nothing to do with anything in this budget. We receive our money quite inconsistently as you stated despite having to pay our bills on a consistent basis. It’s not about tightening the belt or high priced items.
Secondly, I am still undecided about moving the assistant public works director position forward, but given the money we stand to lose from taxes not collected from the Waldron Road project not being finished, and this person could oversee completion of this project and could possibly help to expedite its completion. I’d say it has real potential to pay for itself rather quickly. We have also moved several positions and their salaries in which it will more than make up for this person’s salary and benefits.
One more thing to keep in mind, the “5 year plan” is just that, a plan or a blueprint. Nothing more, nothing less. Things are not always as black and white as one might think. You always have to adapt to situations and reevaluate as necessary.