City looks at funds

Possible means of purchasing new firetruck    

[JAN. 3, 2005]  The need for a new firetruck constituted a major portion of a review of city finances by Les Plotner, the city treasurer, at the last city council meeting.

Plotner had several pertinent observations, beginning with $635,000 in general obligation bonds the city took out in October 2002. These funds are to be used for various capital expenditures. The money has a note with it stating that the project it was borrowed to do should continue to proceed, and funds and any interest earned on the money are to be used completely by the end of the loan on Oct. 1, 2005.

The bond money has been sitting in investment, waiting for use, and grown to $635,336.

"I don't think you issue G.O. bonds just to keep them three or four years and leave that amount in there just to collect interest," Plotner said. "You have to do something with those monies."

In addition, he said that the non-home-rule (sales tax) return to the city for the first nine months of the fiscal year is plus $452,000. With the use tax included, this is bringing in about $50,000 a month. This income should be about $650,000 by end of the 2004-2005 fiscal year, a 3.66 percent gain over last year, Plotner said.

Now Plotner combined the two bits of information to propose how the city might be able to shift funds from one account to another to meet current and future needs. He said he did a little research and spoke with Kevin Hyde about the bond agreement.

It appears that the way the ordinance reads, some of the bond money could be used to purchase a pumper truck that the fire department is in need of, if the purchase is a critical need.

Alderman Glenn Shelton said that since the last committee meeting, when the need for a new pumper was first discussed, the pumper has had to go into the shop for repairs and was still there.

Plotner said he thought the city could take some of the bond money to purchase the new truck and then take non-home-rule tax and put it back in the bond account toward infrastructure for the Elm Street project.

Another option to raise funds would be to issue $300,000 in alternate revenue bonds. But that has two possible drawbacks:

1. They are subject to backdoor referendum. If 7½ percent of the registered voters file a petition against issuing them, then it could get put to a vote.
2. You have to pay interest on those bonds.

Plotner said that everything he proposed would be subject to review by the city attorney, Bill Bates.

Bates was not present to comment.

Plotner suggested the council members think it over for later discussion.

[Jan Youngquist]