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Council authorizes short-term interfund loan to cover projected deficit in general‑obligation bond fund
Summary
Council adopted Resolution No. 2025‑03 allowing an interfund transfer (a short-term loan) from the general fund to the general‑obligation bond fund to prevent a statutory deficit; staff said the transfer will carry an interest rate equal to the state's local government investment pool (4.6%) and be repaid in fiscal year 2026.
The City Council adopted Resolution No. 2025‑03 authorizing an interfund transfer to cover a projected deficit in the city’s general‑obligation bond fund.
Finance Director Brandon Neesh explained the general‑obligation bond fund — which pays debt service on bonds issued for projects including the Justice Center and library — is expected to fall short of revenue in 2025, producing a deficit that would violate Oregon local budget law if not corrected. To avoid an illegal deficit, staff proposed a short‑term loan from the general fund at an interest rate matching the local government investment pool (currently 4.6 percent). The city intends to begin repayment in November 2025 when property‑tax receipts begin and to make monthly repayments until the loan is repaid; final repayment must occur in fiscal year 2026 per ORS requirements for this type of transfer.
Neesh said the general‑obligation bond fund is winding down as debt related to the Justice Center and library approaches pay‑off in fiscal year 2027. He cautioned that while the general fund will temporarily provide liquidity, the general fund could forgo some interest earnings while the loan is outstanding and that staff plan to adjust tax-rate inputs to avoid recurring shortfalls.
A councilor moved and seconded the resolution; council approved it by voice vote with no recorded opposition. The resolution directs staff to complete the interfund transfer under the terms described and to begin monthly repayments to the general fund beginning November 2025.
