Financial institutions and the major auto manufacturers aren't the only ones worried about making ends meet. The Tega Cay City Council is meeting next week to take a second and final vote on a measure to borrow $400,000 against anticipated tax revenue. Without the loan, the city will run out of cash before the end of the month.
It's a scenario many residents are all too familiar with. Many of us are keeping a close eye on that checking account balance and trying to make those last few dollars stretch to the next pay day. But for a growing city with a $5 million operating budget, getting so close to the brink is inexcusable.
According to city officials, the cash crunch was the result of a perfect storm. Water-use restrictions imposed because of a persistent drought and an economic downturn that impacted new home construction caused two sources of expected revenue -- city water department collection and tap fees -- to dry up. It wasn't until the general fund ran perilously low that the city realized it couldn't draw on those to bridge the gap until tax receipts become available in January.
Several problems have surfaced since Council met last week to approve a first reading of the loan measure. One is the lack of a fund balance. The city has been operating without a surplus account because it traditionally shifts money from the water department to cover shortfalls that occur after the fiscal year begins Oct. 1 and pays the money back sometime after January. Although it's risky and short sighted, it wasn't a problem while the water department had the money to spare. But, it's baffling that no one planned ahead after residents were forced to cut their water use because of the drought.
Another example of being short sighted is not consulting the volunteer finance committee earlier. When city staff realized in October that it had to borrow money for the short term, they asked Council to approve a $500,000 loan, which Council cut to $250,000. Committee members could have made recommendations to stabilize the situation before last week, but no one asked.
Worse yet is learning the city has been living hand-to-mouth during the gap between Oct. 1 and Jan. 1 for years. If the city can't balance its budget, it needs to cut expenses or consider raising taxes for the first time in nearly a decade to start saving for the next rainy day. Residents should let Council know which option they prefer.
Fortunately, this is not a crisis. The city has a good credit rating and solid relationships with lenders, so borrowing the money in time won't be an issue, this time. But we all know what can happen when the unexpected occurs.
The city can blame the economy and Mother Nature, but in the end, all officials have to do is look in the mirror to see the root of the problem.
FORT MILL TIMES