Monroe borrows money from itself to balance budget

  • Thu Dec 3rd, 2009 10:58pm
  • News

By Andy Rathbun Herald Writer

MONROE — By giving a loan to itself, the city will perform a $150,000 juggling act to balance next year’s budget.

The plan will allow City Council to avoid new taxes and layoffs.

The council approved the loan at its Nov. 24 meeting by a narrow vote of 4-3. Since then, some have called it an unusual move.

“I’ve never had a budget that we balanced with a loan,” said finance director Carol Grey, who has held her position for 18 years.

The budget season has been tough in the city of 17,000. The council and staff have struggled to make up for lost sales tax revenue, with the general fund facing a $290,000 hole in early November.

Many ideas were considered to deal with the shortfall, which was brought down to about $150,000 after several tweaks, including postponing promotions and delaying hires.

More direct fixes for the deficit, such as raising taxes or cutting services, didn’t sit well with the council. New taxes were characterized as an unjust burden in the struggling economy, while city staff has already been thinned by a hiring freeze, making cuts difficult.

The loan avoids both issues for now. The city will move $150,000 from the public works equipment reserve fund to the general fund.

Public works money can’t be spent on general fund items, which include the police and parks, so the money must be treated as a loan. The city will have to pay it back at a 1 percent interest rate within a year.

Councilmen Mitch Ruth, John Stima, David Kennedy and Kurt Goering supported the plan.

Ruth and Stima called the loan a placeholder. They hope the money won’t be needed at all.

They point to the fact that Mayor-elect Robert Zimmerman has said he may cut as much as $250,000 from the budget after he takes office in January.

While Zimmerman has yet to propose specific cuts, Ruth said they exist.

“It would involve some restructuring, but it would not involve layoffs or loss of existing jobs,” Ruth said.

Others aren’t as confident. Councilmen Geoffrey Thomas, Tony Balk and Councilwoman Margie Rodriguez voted against the plan.

Thomas hopes the city won’t need the loan, that efficiencies are out there. However, he felt the budget needed to be balanced based on current information, not theoretical cuts.

“I just don’t have the comfort to make a decision on a plan that I haven’t seen,” he said.

Mayor Donnetta Walser, who lost re-election to Zimmerman, also questioned the loan. She supports the idea of utility tax increases to balance the budget. She doubts the additional cuts can be made.

“I have some real concerns,” Walser said. “A loan you pay back, with interest.”

The council is scheduled to adopt the budget at its Dec. 15 meeting.

Andy Rathbun: 425-339-3455, arathbun@heraldnet.com.