City Council delayed a vote Monday to refinance the city's debt. The refinancing would give the city enough to cover its $3.9 million budget deficit, but would cost the city about $110,000 in counsel and bond fees, and dump higher interest rates upon the city over the next 10 years.
Councilman Marshand Crisler asked City Attorney Sarah O'Reilly-Evans how much she would make off the debt swap. O'Reilly-Evans' agreement with the city allows her to add a percentage of every bond contract to her $113,000 annual salary, up to a maximum of 1 percent of the cost of the bond.
"What is your fee, Miss O'Reilly-Evans?" Crisler asked.
"My contract hasn't changed since the last time we had this discussion," the attorney answered. "My fees are capped. … I do plan to get with the mayor and work that out."
"But, that would (happen) after we've already voted on this, wouldn't it?" Crisler said.
Council members say they want to see the administration's alternatives to debt refinancing before moving ahead.
City Director of Administration Rick Hill said alternatives, such as cuts to city services, could be more serious than ever before.
"You're talking about cutting out some services entirely. If we don't do this restructuring … we will have to have a layoff. … We cannot fund our work force with the revenues we have," Hill said.
Debt-leery council members like Leslie McLemore want specifics. "Does it mean sending 200 people home? Does it mean not hiring the 60-odd people they were hiring in Public Works?" McLemore asked, referring to the mayor's recent priority to hire minors to cut grass and perform routine maintenance.
Hill had been prepared to offer a rough estimate on the potential cuts to the city, but Chief Administration Officer Robert Walker stopped him, saying the administration would be better prepared to offer numbers later in the week. The Council Budget Committee set a new meeting for Thursday at 3 p.m. to discuss details. State law demands the city balance the budget by the end of September.
Some city employees say they have already been warned their jobs are on the way out. Michael Gerald, a 10-year parts specialist at the Department of Administration's Municipal Garage Division, said he's been told his job will be gone before next year.
"My boss said it's already a done deal," said Gerald "... They're telling me NAPA is going to come in, put all their stuff in, and we'll be given the choice to maybe stay with NAPA as employees or hit the road."
Hill confirmed that the city plans to privatize the city's parts division. "I do believe that's what we were looking at doing," Hill told the JFP. "That sounds about right. We'll know for sure in a few weeks."
Gerald said the city routinely stops buying parts for city vehicles at the end of the fiscal year in October, meaning even police cars have to sit up on cinder blocks until the new fiscal year begins if they break down after October.
A police department source confirmed that the city routinely halts fleet repairs around July and August because of part shortages.
"[T] will close it down and not do any repairs (until the new fiscal year in October) … for inventory purposes," said the source, who spoke anonymously. "What do we do when that happens? We're SOL, buddy. The cars just sit up. One year, we got so bad they didn't have enough money to plug a tire. We can actually say that we couldn't even plug a tire."
Police Chief Shirlene Anderson confirmed that the city is months behind on rent payments on the property housing Precinct 2, though she claims the city has chosen not to make the more than $3,000 monthly payments because the property has not had air conditioning for months and is in bad shape.
"We shouldn't have been paying them for years," Anderson told the JFP, adding that she is working to move Precinct 2 to a new location. The chief said the city leases the property from G.E. Modular for more than $3,000 a month. G.E. Modular refused comment.
Margaret Barrett-Simon said she is more nervous about the prospect of the budget transfer than the refinancing, since tapping the reserve fund could directly affect the city's credit rating.
Adam Lynch, Any word on the state of the budget deficit? melton didn't deal with any specifics in his State of the City Address. I wonder how the figures jumped from 3.9 million to 13.1 million.
How could the numbers be that far off?
I think the short answer is "incompetence," justjess. For a longer explanation, see Adam's story last week.
Read it and weep.
I don't like the way so many things are getting privatized without much coverage or mention from our Council members. I don't think NAPA will be tolerant either when the unpaid invoices begin to pile up.
Notice that NAPA is building a new store on State St. I thought it was cool until you realize it was probably because of this contract.