City Not Out of the Woods
By Robin Vinci | Editor at February 4, 2024 | 6:30 pm | Print
Despite a surplus, an “A” bond rating and increased financial stability, a lot of work still needs to be done for the City to recover from two years of mismanagement of funds.
“After two years of severe, severe damage to our city finances, it (is going to take) us almost 4 1/2 years to get out of it and put us on sound footing again,” said Mayor Erin Stewart. “We are well on our way. We are stable. We are managing. But we are not on auto-pilot. It is important for people to remember we are not out of the water.”
When Mayor Stewart came in to office, the Tim O’Brien administration has raided several funds including the water fund by several million dollars.
“He transferred all the city employees into the water dept. budget, so technically they weren’t being paid for though the city general fund,” said Stewart. “So part of initial deficit the City had was because I had to put those employees where they rightfully belonged which is in the city general fund. We can’t pay employees out of the water fund.”
Stewart said that was a struggle the first year she was in office and that the water fund is not yet back where it was before O’Brien raided it.
“When I took office and figured out we were in a huge hole, we came up with a plan to restructure our debt. I had to first get the operating budget under control. But then we had to come up with how to pay debt,” Stewart said. “I am breathing a sigh of relief because this four part plan (her administration developed) that took 2 1/2 years to implement is finally nearing completion.”
The four part plan consisted of:
- Get Tax Anticipated Notes (TANS) because the City did not have enough money to pay bills
- Get rid of TANS and get swap rates which are variable
- Get rid of swap and finalize to fix rates so nothing fluctuates on market
- Debt Restructuring - figuring out a payment schedule until City pays off in debt 2035
The City is using a $15 million surplus to go to it’s rainy day fund and most of that will be used to help pay for the $260 million in bonds created under the O’Brien administration that put the City in grave financial conditions.
“$15 million sounds like a lot, but for what we have to pay it is a drop in the bucket,” said Stewart. “We still need more funds to get back to where we should be.”
According to a City ordinance, at least 5 percent of operating funds needs to be retained in a surplus fund to protect the City from a scenario it does not anticipate.
“We are finally just under that obligation. Could we use more? Absolutely, but I will not cut, for example, our police officers to put money in there,” said Stewart. “In general, everything is looking really grand, but my office still has to keep a day in and day out focus on what we are spending and how. When we don’t have to do that it will be a great relief.”
