Newport moves cash, uncommits reserves and readies short‑term borrowing to cover budget shortfall

City leaders told the Newport City Council on June 27 they took short‑term cash actions to meet charter rules and avoid a refinancing violation, then moved to uncommit several water and sewer reserves while preparing to secure a new borrowing limit.

Chip Stearns, the council's consultant from NEMREC, told the council that the charter “does not allow refinancing, a line of credit by getting another line of credit,” and that, as a result, council officers and staff moved cash to pay off an existing line of credit. According to Chip, the team used $350,000 from a Walmart‑designated cash account and moved approximately $385,000 into the city checking account to meet an $1,800,000 payoff obligation completed the day before the meeting. Chip warned the city still lacks cash to pay all current invoices; he said there were $562,665.50 in invoices in accounts payable against general fund checking.

The council read items from a memo and moved to "uncommit" five specific reserved balances so the June 30 accounting snapshot would not show commitments the city cannot meet. The amounts read into the record were: wastewater treatment sinking reserve $117,779.83; Vactor sinking reserve $266,105.69; water tower reserve $160,323.15; wastewater treatment facility replacement reserve $213,472.50; and reservoir cover reserve $55,303.12 (about $812,983 total as read). The motion to uncommit those reserves carried on a voice vote.

Earlier in the meeting, the council approved a three‑year loan of up to $53,917 from Pesomsic Bank at 4.97% to purchase a police cruiser (monthly payment $1,615.21); the chair said the purchase is in the current budget and the vehicle is at a dealer in Burlington awaiting pickup.

Looking ahead, officials said the next step is to secure a $2,725,000 borrowing limit to cover cash‑flow needs against anticipated tax receipts. The council was advised by attorneys that a resolution should authorize signing any loan documents, so a special meeting may be warned to vote on a loan resolution (the chair said the council will likely consider this at a warned meeting after confirming attorney guidance). Council and finance staff warned that longer‑term relief relies on voter approval of two potential bond measures, including an $1,800,000 bond to address the accumulated operating deficit. Chip said cash flow would not work if those voter measures fail.

Public commenters and several council members asked for greater transparency and for the finance task force and staff to track and report monthly balance sheets and to identify how the Walmart account will be repaid. Several speakers noted the Walmart account had been intended for economic development and asked where repayment would come from; chair and staff said attorneys had reviewed the short‑term use and expected to replenish the Walmart funds with proceeds from a new line of credit once the bank board and paperwork are complete.

Next steps: attorneys and the bank were expected to finish paperwork early next week, the bank's recommending committee would brief its board, and the council planned to warn a possible special meeting to consider a formal resolution authorizing loan documents.