City uses for money from utility discussed
Friday, August 22, 2014 12:00 AM
MARINETTE — When the city receives the money owed to it from the Marinette Water Utility, it will go directly into the general fund and the council will decide what to do with it from there, according to a decision made by the Marinette Finance and Insurance Committee.
Finance Director Jacqueline Miller posed the question of what to do with the money at the regular committee meeting Thursday afternoon — from which committee members Shirley Kaufman and Dorothy Kowalski were absent.
Miller suggested a few options, including putting the money toward a project from the city’s needs assessment study.
“I’ve talked with Phil Cosson (with Ehlers Financial Planning) and they could do a debt scenario, including how it would affect taxpayers,” Miller said. “That would change if you put the money from the Water Utility’s debt toward the needs assessment projects because then you wouldn’t have to borrow so much.”
She added that the needs assessment cannot move forward at all until she knows how the projects will be funded.
“It’s just a plan so they can draw it out,” she said.
However, City Attorney Jonathon Sbar said putting the money toward a project may not be the wisest course of action.
“That hole in Jackie’s budget has to be filled. She can’t operate with a $2.5 million deficit,” Sbar said. “We have multi-million dollar projects going on all over the city and she cannot function with a hole that big.”
He added that if the city were to spend the money it received from the Water Utility, Miller would still have to reconcile the money within the city’s budget.
“I think she needs to have that money in the general fund where it would have been if the money had come in,” he said.
Miller said she is worried about the city’s current cash flow situation.
“I am concerned about the projects we have going on right now ... we have about $4 million worth of expenses and $2 million to $3 million in grant money coming,” she said. “But from the time we incur the expenses and pay those vendors to the time we get the grant money, there is about a four-month lapse.”
She explained that with the current street reconstruction on Ely, Mann and Main streets, the city has already paid approximately $2 million to the vendors. However, they have only seen about $3,000 in the grant money they were given.
“I do have concern about the money we’re dishing out and how fast that grant money is coming back,” Miller said. “We may have to do a short-term borrowing ... I think it needs to be looked at.”
Sbar said the $2.5 million deficit has exacerbated the city’s cash-flow problem and Miller agreed. She said the money from the utility’s debt would solve some future cash-flow problems.
“I think some should be set aside for the road construction projects so we don’t have to look at short term borrowing again,” Miller said. “If we put the money into the general fund, we shouldn’t have to do any bond issues to fund the future road construction.”
However, Miller said she doesn’t think the Marinette Water Utility would be able to pay its debt to the City of Marinette in one lump sum.
“If they (Water Utility) borrow the money for that, I’m afraid their debt capacity will be at the max and when we go to do Riverside three years from now, they won’t be able to borrow for the work that needs to be done there,” she said.
The Riverside Avenue reconstruction is estimated to cost the Water Utility around $1 million.
Miller said there will have to be future discussions between the utility and the City Council to settle on a plan to pay back the debt.
The Finance and Insurance Committee voted unanimously to distribute the money, when it is received, into the city’s general fund and from there, the city can make further decisions about what to do with the money.