Annapolis has announced that they will be seeking a line of credit from Bank of America to help offset the fiscal crisis in the city. While they did not disclose the amount of this line, their press release (after the jump) indicates that they are concerned about meeting payroll obligations in the next few months.
The City believes that this is a temporary measure and will only be needed until 2011 revenues start to be realized in October 2010.
Since taking office, Mayor Cohen has cut expenses where possible. He has curtailed overtime and laid off employees in this fiscal year as well as proposed eliminating positions for the new budget. However, Cohen has also increased salaries and positions in contractual employees and is seeking to add another attorney to the City payroll.
The Finance Committee will introduce and co-sponsor the legislation on Monday night and fast track it for a vote on April 16, 2010. Alderman Classie Hoyle is the Chairman of the Finance Committee and has been staunchly opposed to Cohen’s budget cutting. It is surprising that she is sponsoring this legislation along with Aldermen Israel and Pfeiffer.
Last year the budget was passed on a “credit card” and it appears this year is no different. What are your thoughts on the City applying for a line of credit to make payroll?
City press release after the jump
The City’s Press Release:
City Pursues Line of Credit to Meet Cash Flow Crunch
Annapolis, Md. (04-08-10) – Mayor Joshua J. Cohen has announced that the City is pursuing a line of credit in order to make payroll and meet other expenses for the next few months.
The proposed line of credit, the first sought by the City government in more than 25 years, will enable the City to offset revenue shortfalls until the City starts receiving new Fiscal Year 2011 property tax revenues in October.
“This line of credit is a temporary measure to ease our short-term cash flow crunch,” Mayor Cohen said. “These are austere times, but taxpayers should remain confident in the City’s overall financial strength and solvency.”
The three members of the City Council’s Finance Committee are co-sponsoring the resolution which will be introduced Monday night and brought for a vote on April 26th.
The city is pursuing the line of credit through its banker, Bank of America.
Faced with an anticipated $9 million structural deficit through FY 2011, Mayor Cohen instituted layoffs and recaptured funding from vacant positions and proposed eliminating positions in his FY 2011 budget. In the meantime, the mayor has also cut overtime spending and curtailed spending on projects and supplies, but the City remains short on cash as property tax revenues and other fees collected are falling short of estimates.