Cash flow issues force city to borrow $1 million to pay expenses

City leaders continue to keep a close eye on finances as overall revenues remain lower than projected in the current fiscal year that began July 1.
This will be the first time in many years the city will have to borrow money to cover operating costs until ad valorem taxes begin to come in in large amounts.
On Monday night, Councilman James H. (Jimmy) Douglas, chairman of the council’s finance committee, recommended the city borrow from itself and take approximately $1 million from its competitive trust account with the Municipal Electric Authority of Georgia to cover operating costs through the end of 2013.
Douglas said that once tax collections begin to come in the city would repay the MEAG account.
“We’ve instructed the city manager and the finance director to closely monitor expenses and if the revenues don’t improve we may have to eliminate or defer some items in the budget,” Douglas said.
The council’s finance committee chairman said that once proceeds from the 2014 Special Purpose Local Option Sales Tax are collected there will be money to reduce the burden on the general fund.
According to Douglas, some of the sales tax proceeds are earmarked for public safety equipment so money from the general fund will not be required to make those purchases in the latter part of fiscal year 2013-2014.
City Manager Chris Addleton says that the cost of purchasing electrical power has increased substantially and at the same time the city is experiencing a warm winter and coming off a cooler, wetter summer.
While city leaders are battling a tight cash flow position, the overall finances for the city remain positive, according to the report given to the city council Monday night by city auditor Tom Carmichael with the auditing firm Carr, Riggs & Ingram.
According to the most recent audit, the city continues to pay down its long term debt by over $1 million annually. The city’s total long term debt as of June 30 stood at $17,143,000, which is down from $18,545,000 last year.
Carmichael noted the city had budgeted a deficit for the general fund, which he did not recommend, but on a positive note by reducing expenses the city had managed its budget and reduced the deficit in the general fund from a budget of $137,000 to an actual deficit of $87,000.
The auditor pointed out that revenues from the sale of electricity jumped from $15,652,000 in 2012 to $17,187,000 in 2013, but that expenses also ticked up from $12,534,000 in 2012 to $13,752,000 in 2013.
The operating income from the electric division was $3,435,000 but the city transferred out $4,766,000 from the electric fund to cover other operating costs, compared to a transfer of $3,461,000 in 2012.
“In 2017 the CNS bonds will be paid off and that will reduce our debt service by about $1 million per year. The combined utility bonds will be paid off in 2024. So in the next several years we should be in much better shape,” Addleton said Monday night.
Once the final audit report is complete the council will have to approve it before the auditors can submit it to state officials as required by law.

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