The City Council on Monday approved $2 million in short-term borrowing to avoid a city cash flow crisis.
The lawmakers voted 7-0 in favor of issuing a tax anticipation note not to exceed $2 million to cover the citys cash flow needs.
A tax anticipation note is a note issued by municipalities to finance operations and is paid back with anticipated tax receipts.
Its just to carry us over until the taxes come, said City Comptroller Philip A. Cosmo, adding that a $1.8 million tax anticipation note from 2012 will soon be paid off.
The citys fiscal year runs from Jan. 1 to Dec. 31. The note will be paid back in a year.
City Manager John M. Pinkerton said the citys need for cash flow relief is rooted in a familiar scenario. The city is plagued by too many delinquent property tax payments, unexpectedly high expenses like a $400,000 employee health care bill from January alone and insufficient revenues elsewhere to cover the cost of city government including payroll.
It all compounds, Mr. Pinkerton said. Were behind before we start.
One notable tax deadbeat, meanwhile, is going to get some relief of its own in the cash flow drama. East Aurora-based Alliance Energy Group had until Monday to pay the city $222,971.83 in back 2012 taxes on its 19-year-old cogenerator located on the grounds of the St. Lawrence Psychiatric Center. Otherwise, the city stood to take the deed to the building and become its owner.
But Mr. Pinkerton said that Alliance, whose plant is a source of steam heat for the psychiatric center, will have more time to pay its tax bill.
We are in the process of negotiating with Alliance Energy making a full payment of taxes by the end of July, he said.
The full payment, Mr. Pinkerton added, will be with interest.
With the fate of the psychiatric center to be decided by the state next month, some councilors believe that gives the cogenerator a too-big-to-fail status that makes it difficult not to grant an extension.
Id rather have those taxes than to lose that, Councilwoman Jennifer Stevenson said. I think it should be considered.
Councilman Wayne L. Ashley agreed.
If we took possession of it, what would we do with it? he asked.
Deputy Mayor Michael D. Morley said he appreciates the gravity of the cogenerator-psychiatric center co-dependency, but he doubts that a resident facing the loss of his or her home because of unpaid back taxes would.
I think it sets a bad precedent, he said.
Overall, according to Mr. Cosmo, Alliances delinquent tax bill including the city, St. Lawrence County and Ogdensburg City School District is $528,522.60.