By JAMES MITCHELL
Sunday Times Newspapers
TAYLOR — Having to borrow more than $3 million from a city fund to cover municipal payroll was, City Council Chairwoman Cheryl Burke said, anticipated. What remains to be seen is if the city’s annual budget in June will meet state requirements for Taylor’s five-year debt elimination plan.
The city council April 2 approved a motion to borrow $3.2 million from the water and sewer fund to ensure that April and May payrolls — about $2 million per month — will be met. Burke said that council had been told last year by financial advisors that such adjustments would be needed.
“We don’t start getting taxes in until closer to fall,” Burke said. “We anticipated we would have to do some borrowing.”
In-house municipal borrowing is common, Burke said, but recent changes in state law — including emergency management statutes that provided a framework for Taylor’s debt-elimination agreement — require more stringent safeguards.
“Those funds have never been distinguished before,” Burke said of the separate accounts.
The expected cash-flow problem posed no threat to the city’s long-term, five-year deficit elimination plan that was drafted last year. Declining revenues and increased municipal costs left city officials with an anticipated $5 million deficit that invited speculations that Taylor could be a candidate for state financial management.
For nearly a year city officials worked with state treasury representatives to craft a plan to eliminate the debt: about 20 percent of the projected deficit is to be cut from the 2013-14 budget that must be approved by July.
That goal remains possible, Burke said. While this month’s borrowing of funds from one account to another was expected, the pending budget may be up to $3 million larger than anticipated when the plan was approved last year.
The situation remains as it has been for some time, with the possibility of layoffs and service reductions looming over city hall.
The city’s longtime financial problems will, again, be tackled by some newcomers. A permanent treasurer likely will not be appointed until the November election; in 2012 retired school superintendent Lynn Cleary accepted the position that had been vacant since Wayne Avery resigned in 2011, and divides her time between Michigan and Florida, to where she had retired.
Last month saw the replacement of Jenetta Kregel as finance director with Richard Eva Jr., a 30-year veteran of county and municipal finance positions. Kregel had been serving since late 2011 and may not, Burke said, have had sufficient experience for the extreme challenges facing Taylor.
“The learning curve was overwhelming with special funds and grants,” Burke said. “(Eva) has many years of experience and is more than qualified.”
Efforts to boost city revenue may be aided with the recent addition of Greg Capote as economic development director. Capote recently served as city manager for Lincoln Park.
Burke said the makeup of city council itself may change after November. Candidates have until May 14 to submit nominating petitions for the general election, the ballot for which will include the positions of mayor, treasurer, clerk and council seats.
(James Mitchell can be reached at [email protected])