Canton lays off 20 employees to save money

Canton officials are putting 20 employees on the streets and making other cuts after being told the city was in danger of not being able to pay its bills by late April.

City Manager Rob Logan said the city gained a little breathing room this week with cuts projected to save $728,488 this year, mostly in salaries for the laid-off workers.

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PHIL SKINNER/ pskinner@ajc.com

Costs of the Hickory Log Reservoir were initially estimated at $5 million to $6 million, but have since grown to $35 million.

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PHIL SKINNER/ pskinner@ajc.com

The Canton Marketplace shopping center is scheduled to open this year with Lowe’s and a Super Target as two of the anchor stores.

• Photos: Canton faces financial crisis

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But another $300,000 to $400,000 still has to be cut to fill a budget shortfall estimated at $1.1 million to $1.2 million, Logan said.

“We’ve seen a reduction in all of our [revenues], water, taxes, everything,” Logan said.

The building of residential housing — the bread and butter of this Cherokee County bedroom community — also “has just been reduced to about zero,” he said.

Mayor Gene Hobgood said the council was somewhat taken by surprise. “As recently as September, we were told the finances were OK,” he said.

But the city’s problems go deeper than the economic crisis that’s affecting governments and households across the state and nation, the mayor said.

The city has outstanding loans of about $60 million, and annual payments on those that amount to about $6 million, Hobgood said.

He said he’s been told that could be a record for a town of Canton’s size (about 17,000 residents), with a total annual budget of about $20 million, including $10 million dedicated to general government expenses.

The $60 million in debts was amassed before Hobgood took office, largely for the Hickory Log Reservoir. Loans also were taken for the city golf course and other projects, Hodgood said.

“All of them were good projects, but it’s kind of like shopping with a credit card,” the mayor said. “We acquired good things that we are having difficulty paying for.”

The costs of the reservoir were initially estimated at $5 million to $6 million, but have since grown to $35 million, said City Councilman Bill Bryan, new chair of the council’s Finance Committee. The city also is going to have to borrow another $4 million to see the reservoir through to completion, he said.

But as to the immediate cash-flow problems, Bryan confirmed last week that, without quick action, “by late April or early May, the city might not be able to pay all of its bills.”

Logan and Hobgood said the council is likely to consider raising several fees, such as for street lights and garbage collection, in hopes of generating additional income for the city.

The City Council also may raise taxes next fall and try to restructure some of its debts, Logan said.

“I don’t anticipate any problems,” he said. “I’ve talked to some of our creditors so we would be OK.”

The layoffs occurred across departments and affected about 10 percent of the city’s workforce. Most of the cuts were in development-related departments, such as building inspection, plan review, engineering and zoning inspection.

Hobgood said the council tried to avoid cuts in the police department, which lost a records clerk and evidence custodian, according to a report provided by the city.