By ANDREA POTEET
Sunday Times Newspapers
ALLEN PARK – A vote by the city council Tuesday may save the city from running out of money in the next two weeks.
The city council passed a motion during their meeting that day to apply for $4 million in tax anticipation notes, effectively borrowing next year’s taxes from the state treasury, to avoid running out of general fund money, a fate Plante and Moran’s Carl Johnson, the city’s acting financial director, said could happen in as few as two weeks.
The TANs, the first in a two-step process, take up to two weeks to close, and much of the city’s $2 million general fund balance is already earmarked for Southfield lease property subsidies and payroll.
“We’re getting to the point where we almost shouldn’t pay another bill until we get the TAN proceeds in,” Johnson said.
After the notes come in, the city would sell $2.2 million in fiscal stabilization bonds, unless they can secure an emergency loan from the state, and use the TAN income to pay the bonds back. Fiscal stabilization bonds can take up to six months to close.
Johnson also presented the city’s proposed budget at the meeting, a tally of $19.297 million in projected expenditures. Paired with $19.298 million in projected revenues, the budget leaves $1,060 in fund balance for the June end of 2013 fiscal year. The city now has no fund balance, after spending more than $3 million from the fund balance since 2010.
The city will begin the next fiscal year, which begins July 1, more than $4 million in the hole, starting with a $2.3 million deficit and having to repay $2.2 million they plan to borrow from the state to get through this fiscal year.
But the budget makes several assumptions: that a two-year four mill levy for the 104-acre lease property will pass, relieving the city of its annual $2.2 million subsidy to the property, and that the city can net $1 million in wage and health care concessions from its Fire and Police departments.
After a recent state Court of Appeals ruling against a lawsuit from the city’s firefighter’s union, the city no longer is required to hire six more firefighters or pay backpay to the 22 currently on staff.
The budget also includes a 10 percent anticipated cut to the 24th District Court budget, for which the city currently is bargaining.
The city also is discussing cuts to retiree health care, as it totals about $3 million per year. Health care for active employees comes in at $2 million a year.