After being approved by the Common Council at last Tuesday’s meeting, Mayor Michael Villa said the issuance of a $2 million tax anticipation note was a “precautionary measure” to make the sure that the city has cash for operating expenses through the coming months.
The measure comes after a recent audit report showed that the city’s general fund has a negative $3.8 million fund balance.
Controller Matt Agresta explained, “We’re borrowing against uncollected taxes from a couple of the past years. When that note matures, we would take funds that were collected from those years, pay it down on that note, and if we still felt we needed to, issue a new note for a lower amount.”
Agresta said the loan will be due in October 2018, but it may take take up to two years to stabilize the city’s cash situation.
“In September, October we’ll re-asses where we’re at, if we think we’re well enough that we can pay it off with taxes and not do another one. But typically…it’s a cycle, where you have at least a year, or maybe two to make sure you’re built back up to a point where your not worried about potentially not having funds available for what you need to purchase,” said Agresta.
He added, “Rather than wait until we get to a point where we don’t have funds available to pay for something. I’d much rather do this and have it available, even if we don’t need it. Because I don’t want to ever get to a point where we have a problem with paying for something that we’re due. That’s not an issue right now. But I sense it could be in the next five, six months if we don’t do this now.”
Agresta was optimistic that the upcoming foreclosure auction, tentatively scheduled for this summer, will bring in revenues that will help offset the loan, and that running the foreclosure process on a regular basis will also increase revenues by compelling compliance with city property tax bills.
