East Point agrees to borrow cash to finance operations

East Point will borrow $8 million to pay its debts after all.

The City Council voted unanimously in a special session Monday night, with one member absent, to issue the tax-anticipation note, or TAN. Mayor Earnestine Pittman, who vetoed a similar vote just a week ago, said she will let the move stand.

“I understand we need to have the money to pay the February debt,” Pittman said. “But we still don’t know our ability to repay, come December.”

City Manager Crandall O. Jones convinced the council that it couldn’t afford not to take the risk.

The city owes a $6 million bond payment next month, plus another $2 million in city payroll.

City projections show that East Point would be about $400,000 short of making those payments without borrowing the $8 million.

Even with it, the city would run most of the year with just $2 million on hand, until property tax revenues start coming into city coffers next fall.

“Without the TAN, you would put us in a situation where we would be cash-strapped just to do the business of the city,” Jones said.

That would be nothing new for the south Fulton County city, which at its worst ran $11 million in the red during years of deficits.

Two years of furloughs and cuts helped create a $933,000 surplus as of Dec. 31. But tax collections fell more than $2 million short, wiping out the cushion and threatening to plunge the city back into a deficit.

Because of that precarious position, Pittman asked the council to set aside $2 million of what it borrows next month. She preferred the city make more cuts rather than accumulate additional losses by end of the fiscal year in June.

The council rejected the request but pledged that its budget and finance committees would carefully monitor spending to catch potential deficits before they add up.