East Point appears to have come out ahead financially last year, but it may need to dip into its electric utility trust fund to erase the city’s long-standing deficit.
The cash-strapped city entered the new fiscal year on July 1 with about $5 million cash on hand, including about $2.7 million in savings from its general fund, according to a preliminary report released Monday.
City officials had hoped to use the extra money to eliminate a $6 million debt and to help cut down on borrowing. The goal has been to be debt-free and no longer borrowing by 2011.
But the city may need it to cover any losses if it collects less than its projected $14 million in property taxes this fall. It owes $12 million — borrowed to fund city operations — by December.
“We can begin fiscal year 2010 with no deficit with a council authorization of a transfer,” said city manager Crandall O. Jones. “That’s a decision we will have to closely examine when we get to that point in the year.”
A transfer would come from the flexible operating account of the city’s Municipal Competitive Trust. The state is expected to put $4 million in that fund this year, a rebate to the city because it did not join in a new electric-plant project.
Citizens, though, have repeatedly urged those dollars be spent to offset an increase in electric rates as well as to buy new meters and other equipment. That argument has found some footing on council.
“This is not the time to say we are not going to borrow,” said councilwoman Earnestine Pittman. “Cash on hand is just money sitting there until you use it, and we need to use it.”
The next step will be to begin an audit of the last fiscal year. That audit, expected to begin in August and be ready by December, will be the final say on just how much money the city has on hand.
And by November, the city should have an idea of how much money is coming in through property tax collections — and whether it will need its savings to pay that looming $12 million bill.
“We are still living this year on next year’s money,” said city finance director Jim Schuster. “We have yet to get ourselves square.”
East Point numbers
Preliminary budget report, fiscal year 2009
General government operations
Revenues: $33.2 million
Expenditures: $30.5 million
Difference: $2.7 million
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