City Council announced last week that some unfunded debt accumulated over the past several years could leave the city as much as $600,000 in the hole.  However, Mayor Justin Taylor is disputing that assertion.


City Council announced last week that some unfunded debt accumulated over the past several years could leave the city as much as $600,000 in the hole.  However, Mayor Justin Taylor is disputing that assertion.
Council’s finance committee has been closely monitoring the budget throughout the year, and Councilman John Gigliotti — who heads the committee — has been providing monthly reports at the council meetings on budgetary trends.  Overall, he said those trends “still look pretty good.”
Yet he noted at council’s meeting on Monday night, Sept. 20, that “we do have some concerns.”
He explained that, unbeknownst to council until recently, some unfunded debt remained from a $1 million loan obtained by the city — something which he said “caught us a little by surprise.”  Consequently, he said the city is looking at a possible deficit this year which could be quite substantial.
Councilman Dr. Joseph Marzzacco asked him how large a deficit loomed, stating the importance of keeping the public informed on the city’s finances.
“The raw number right now, in a worst-case scenario, is $600,000,” Gigliotti responded.
Mayor Taylor, on the other hand, insisted that the situation isn’t as grim as it was made to appear by the council members.  He told the NEWS that council’s characterization of the city being possibly $600,000 in debt “wasn’t exactly correct.”
He stated that the city accumulated $900,000 in debt from 2004 to 2008, and in September of 2008 received court approval for an unfunded borrowing of $1 million.  However, with the recession which occurred in 2009, he said the city was not able to obtain that financing from a lending institution until this year.
“So essentially we were authorized to borrow $1 million at the numbers that were in place at the end of 2008, but a whole year passed before the transaction actually took place [resulting in the disparity],” Taylor related.  “Add to this the fact that the city operates with a structural deficit of between $250,000 and $350,000, which carried over from 2009 into this year, and you can understand how we arrived at this point.”
“At the same time, the city is anticipating several other revenue sources which have yet to come in, including grant reimbursements, project reimbursements, and proceeds from the sale of vehicles and property,” he noted, explaining that these additional revenues should bring the city back down to its normal operating structural deficit of about $250,000. 
Gigliotti actually agreed with that.  He stated at the council meeting that the potential $600,000 deficit “could come down quite a bit if things go our way.”  Still, he seemed a bit more uncertain about whether the additional revenues would ultimately be produced.
He said city officials will have to “work pretty hard” to make sure those revenues are secured.  He told the NEWS that dealing with the unfunded debt “will certainly be a challenge,” but added that “we do have some time to try to get things straightened out [before budget time at the end of the year].”
Taylor and Gigliotti agreed as well about the city budget’s positive current trends.
“For fiscal year 2010, things are looking good,” Taylor related.  “We may even have a small surplus.”