By ANDREA POTEET
Sunday Times Newspapers
ALLEN PARK – A motion for the city to issue tax anticipation notes, effectively borrowing against future tax income, has stalled.
City councilors Tuesday passed a motion to table the action, the first in a two-step process for the cash-strapped city to net $2 million to get through the end of the June 30 fiscal year, after Councilman Dennis Hayes cited a lack of information about the move and the city’s finances as a whole.
Current reports list the city’s general fund at about $2 million. In the past, financial management firm Plante and Moran representative Carl Johnson told councilors they may run out of money by March of this year.
Hayes also mentioned a radio interview in which Mayor William Matakas alluded to the city having enough money to get through the fall even if a two-year, 4-mill May millage fails.
“For months, we’ve heard we were losing $350,000 a month,” Hayes said. “We heard we were going to run out of money in March, we heard we were going to have a budget in March … I think we have some very bad information and I’m not convinced I know what the heck is going on with the money. I don’t think anyone does, frankly.”
The $4 million in TANs were required by the state before the city could sell $2.2 million in fiscal stabilization bonds, which would be used for cash flow if the city cannot get an emergency loan from the state. The city had hoped the avoid the TAN step, as it would provide cash flow but not impact the estimated $2 million deficit, but State Treasury representatives in February told councilors they could only bypass the TAN step if they already had an emergency financial manager in place.
TANs take up to 30 days to close. Fiscal stabilization bonds take up to six months.
Some of the fiscal discrepancy may be explained by individual departments, many of which are on track to come in under budget by the fiscal year’s end. The Recreation Department is set to come in more than $300,000 under budget and the Fire Department is currently at 75 percent of its total year’s budget.
Current budget issues will be discussed during a special meeting about the 2012-13 budget scheduled for 7 p.m. Tuesday.