- Real Estate
- Paris Flash
The Paris City Council agreed Tuesday on three add-on’s to its 2013-14 budget, but heeded a warning from Finance Director Gene Anderson not to repeat the sins of city councils a decade ago that dipped into reserves “again and again and again.”
At the end of a broad-ranging discussion, Mayor AJ Hashmi summed up the council’s consensus: “We keep the projects that we have promised. And we find ways of budgeting them, other than dipping into the reserves.”
The council left it up to Anderson to find places to cut to make room in the budget for three items he had not included in his proposed budget for the fiscal year that begins Oct. 1:
The city charter requires the council to approve the budget no later than Sept. 27 of each year. The vote on the 2013-14 budget will occur on Sept. 26.
Anderson will need to find places in his proposed budget to make $122,000 in cuts to accommodate adding R3bi and Retail Attractions, or its equivalent.
He said the most expensive part of outdoor bathrooms for the fairgrounds will be getting water and sewer to the locations. That can be done with in-kind labor and material from city crews, Anderson said.
“We would not have to have an elaborate structure. Putting in the water and sewer would be the bulk of the cost,” Anderson said.
The council decided to hold off on requests for about $125,000 in proposed improvements to the Trail de Paris and $141,000 from the Lamar County Chamber of Commerce to pave the Love Civic Center parking lot.
To include them in the budget would have required spending more money than the tax rate would bring in by taking money out of the city’s reserves.
That’s deficit spending, District 3 Councilman John Wright pointed out.
“You know, we promised the voters on the bond issue that we would not raise taxes, nor would we raise the water rate. To use deficit spending is like saying ‘We’re going to rob you, but we’re going to wear a mask,’ ” Wright said.
“I suggest we wait on these projects and figure out a way to pay for them,” Wright said.
That’s what the council agreed to do.
“Hold off on the trail and the parking lot,” District 4 Councilman Dr. Richard Grossnickle said, summing up the council consensus.
“Once we’ve passed the budget and gone on, we can see how things go and we can sit back down and discuss those things and find other ways of doing it,” Hashmi said.
In the meantime, District 6 Councilwoman Cleonne Drake won a concession from Anderson for city workers to patch some “pretty good-sized pot holes” in the civic center parking lot.
“We could do some patch work,” Anderson said
“As far as the parking lot is concerned, Hashmi proposed, “There are other ways of doing this.”
He mentioned the possibility of the city passing an ordinance to increase the city’s hotel/motel occupancy tax.
Presently, 13 percent is added to the bill for people staying in Paris motels – a 7 percent state tax and a 6 percent city tax.
State law allows cities to raise the local tax to 8 percent — for a total hotel/motel occupancy tax of 14 cents total — to provide money for tourist-related activities, which include maintenance of civic centers, including the parking lot.
“We can raise the hotel/motel occupancy tax and use that money to do the paving of the parking lot. It’s perfectly legal,” the mayor said.
“It would mean only 69 cents a night more per room,” he said, but over a period of three years would raise enough money to pay for the parking lot.
“Or we could go ahead and do it if need be, and then replenish the money later, using the hotel/motel money,” Hashmi noted.
That suggestion drew nods of approval across the council.
The cost of the average $69-a-night room in Paris would rise from $77.97 a night to $78.66 a night – including $4.14 for the state tax and $5.52 (instead of $4.83) for the local tax.
Early on in the budget discussion, Anderson conceded there was enough money in reserves to accommodate all the items the council was interested in adding.
Anderson said he has predicted excess balances on Sept. 30, the last day of the current fiscal year, of $9,384,855 in the General Fund and $4,067,015 in the Water and Sewer Fund.
It is city policy, the finance director noted, to never fall below five months of operating capital in the General Fund ($9,012,127) and four months in the Water and Sewer Fund ($3,413,651).
That means the council could conceivably pull out $372,728 from the General Fund reserves and $653,364 from the Water and Sewer Fund reserves.
District 5 Councilman Matt Frierson said there’s a difference between using reserves one time for an important project.
“As long as you understand you can’t spend more than you take in, again and again and again, you know, that deficit process,” Anderson said.
Then he took the council through some bad times the City of Paris went through a decade ago.
“Some of you may remember where that happened in the Water and Sewer Fund. The city council went year after year without raising the water rate and we ended up where the Water and Sewer Fund actually went in the red,” Anderson said
The tapes of the council meetings of those days reflect that Anderson repeatedly stressed the importance of raising the water rate, to no avail.
“I’m not talking about a small amount. I’m talking about a couple of million dollars. The only thing that kept us from having to borrow money was we had a consolidated cash account that contained all of our different funds in the same bank account, and for a period in late 2004, we had bond construction money.”
Anderson said that “as the finance guy,” it’s his responsibility to point that out to the council.
“Understand that you can’t do that year after year or we would be back where we were in that time frame,” Anderson said.
“I agree 100 percent,” Frierson said.
The city council of 10 years ago “inherited that problem, and I’ll give them credit; they fixed it,” Anderson said, by raising the water rate.
From 2004 through 2008, the council improved the situation from a deficit of $2,633,936 in the Water and Sewer Fund to a positive balance of $1,134,476, Anderson said.
By Charles Richards, eParisExtra