By ANDREA POTEET
Sunday Times Newspapers
ALLEN PARK — The city is a step closer to borrowing money against future tax funds in an attempt to keep the general fund afloat while waiting for property tax payments to come in.
The City Council voted Tuesday to begin collecting paperwork relative to a tax anticipation loan of $2 million to $3 million through Comerica Bank. The loan is meant to act as a “cushion” until tax money comes in and also must be approved by council before it is completed.
“If we continue the way things are now, we would be out of money in the next couple weeks,” City Administrator David Tamsen said. “This will help us with our cash flow in terms of this fiscal year and for the first part of next fiscal year.”
Before resigning in April, former Financial Director Timothy McCurley predicted the city would end the fiscal year with the budget balanced, but no money in the bank.
Property taxes are due July 1, when the new fiscal year begins, but can be paid without penalty until mid-August. Tamsen said the city generally does not receive its tax funds until then.
As a backup plan, officials also are considering a loan from the city’s Downtown Development Authority. Both options have been approved by former Financial Director Kim Kleinow, who is working part time for the city until the budget for the next fiscal year is ready.
The city currently does not have a full-time financial director.
A budget hearing originally scheduled for Friday was canceled at the last meeting as officials do not anticipate the budget will be done by that time.
Tamsen said the city also is waiting for other unspecified revenues to come in, but needs to go forward with the loan process in case they do not.
“Will we need this money? Quite possibly yes,” Tamsen said. “We will try to get it either through a loan or tax anticipation notes.”