Annapolis Running Out Of Cash Fast

| September 13, 2010 | 2 Comments

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Disclaimer: We were unable to attend tonight’s City Council meeting. We were provided with the attached (PDF) cash projections prior to the meeting. Naturally, we had some questions and observations. We had a call with Phill McGowan moments before the meeting was to begin and his comments are included. You can reach your own conclusions and we welcome you to leave your thoughts in a comment..

Observations

  • The three entries from Bank of America on September 13 ($1.1 million) appear to be the last of the $10 million dollars approved in May. (PM: No, the $10 M was spent in July. These are other receipts)
  • It seems that the plan to receive money from the County on an every other week basis never materialized as the property tax revenues are coming in monthly. (PM: The plan was for every other week through October and then monthly thereafter)
  • It seems that the monthly debt service payments are for interest on the initial $10 million dollar line of credit plus the bond payments. (PM: Bonds and Leases)
  • The $10 million line of credit appears to be paid back in late November. (PM: Yes)
  • At the end of the year ,the City will not have enough cash to pay their bills and without any property tax revenue will be forced to seek yet another loan.
  • The unreleased checks (top right column page 1) are currently being held and are reflected in the 10/11 release. (PM: Yes)

Questions

  • Where and how did the City spend the initial $10 million line of credit?
  • Is the Mayor looking to introduce the bill tonight to access the additional $6 million already authorized by the Council? (PM: No)
  • Will the Mayor be looking to increase that $6 million to the $10 million he initially requested?

Comments From McGowan

  • This does not include future cuts in transportation or reduced overtime spending.
  • This does not include increased revenue from increased development fees.
  • The City is considering refinancing their bonds which could realize a $5 million savings.
  • The goal is to make it through October and then look at a longer term picture as to the need for additional loans or lines of credit

Again, the financial survival of the City is based on a lot of stars aligning.  We do not have developers lined up to build int he city, so the additional revenue from increased fees is a dream. We are still in a precarious position with the litigation surrounding the construction of the police station. We have some expenses to look forward to for the Market House (either in construction, management or a litigation–which we understand is a real possibility). Once November rolls around, the revenues to the City decrease and the expenses have the potential to increase.

With these factors, it seems very likely that the Mayor and Council will, once again, borrow money to balance the budget. Expect a resolution in October to tap the $6 million and another in January to tap the balance of the of the requested $10 million.  The net result will be that in order to balance an $80 million budget, the City will have borrowed $20 million and paid back $10 million.

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Category: Local Politics, NEWS, POLITICAL NEWS

About the Author ()

John is the publisher and editor of Eye On Annapolis. As a resident and business owner in Anne Arundel County for more than 15 years, he realized that there was something missing in terms of community news--and Eye On Annapolis was born in late spring 2009. John's background is in the travel industry as a business owner, industry speaker, and travel writer. In terms of blogging and social media, he cut his teeth with MSNBC.com.