Mayor-Elect Nancy Rossi is very concerned about the $25.77 million of borrowing (bonding) that the outgoing O’Brien administration executed last week. Of the borrowing was $16.13 million to pay down the cumulative deficit as of June 30, 2016, which is approximately $16.8 million. The remaining $9.64 million of bonding permanently finances capital projects and purchases made over the past 3 years.
“I wish the bond sale would have been postponed until my administration took office and had a chance to review and weigh in. The bonding was approved by the city council over a year ago, would two more weeks have mattered? The bonding included deficit financing for the cumulative operating deficits through fiscal year 2016. We know there is likely to be a deficit in fiscal year 2017 (6/30/2017) which is currently undergoing an audit and we have a much bigger budget problem in the current fiscal year because the mayor included an additional $8 million in state aid that never materialized. He has created an $8 million disaster that will probably require the intervention of a state review board.
Furthermore, this bonding will require an annual debt service payment of nearly $3 million for the next 10 years. I think deficit bonding was the city’s only option at this point but we really should have balanced our budget before we went and sold the bonds. I am not sure the mayor thought about where the money was going to come from to pay the new debt payments. We cannot pay our bills now.
I had no grand illusion that I was walking into a rose garden. We know it was bad—and it certainly is. We will, as promised, begin making the tough budget decisions early next month to ensure that we balance our budget going forward and create a much needed culture of fiscal responsibility, said Nancy Rossi.