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Newport City council approves $800,000 increase to tax anticipation line of credit
Summary
At a special meeting, the Newport City Council voted to raise the city's tax anticipation line of credit by $800,000 to cover short-term cash-flow shortfalls; council members and the treasurer said the increase is intended to be repaid from incoming tax receipts and a state pilot payment.
Newport City's council voted at a special meeting to increase the city's tax anticipation line of credit by $800,000 to address immediate cash-flow needs.
The measure, introduced by the council chair and presented by Treasurer Jim Johnson, passed after a motion and second. Treasurer Johnson said he filed an application for an additional $800,000 because the city is ‘‘still having a cash flow problem’’ and that unused funds would be returned. He told the council the bank requires minutes showing authorization to increase the existing cap.
Why it matters: Council members described a recurring shortfall that has forced the city to borrow in recent years. Treasurer Johnson provided the council's best current estimates for revenues: a total tax roll of about $4,995,000 for the year, with roughly half expected by November and an expected steady flow by Nov. 1; he said the city might collect about $2.34 million by Nov. 15 (school portions aside). He also said the city is awaiting a state pilot payment he estimated at about $600,000, but could not confirm its exact arrival date.
Details of the vote and conditions: The approved motion specified that, as specified monies come in, those dollars would be designated to repay the $800,000 unless the council later approved a different use. A council member moved the motion and another seconded; the meeting record shows multiple council members saying "Aye" and the chair stated, "Ayes have it, and the motion is carried." The transcript records at least two ‘‘Aye’’ responses during the roll call; a full roll-call tally was not recorded in the transcript excerpts provided.
Council concerns and next steps: Several council members cautioned that without structural changes the city is likely to return to the same deficit position in future months. Members pointed to the water and sewer enterprise drawing on the general fund, limited reserves, and past borrowing as drivers of the city's recurring borrowing cycle. The chair directed staff to provide contact information and updates on the status of anticipated receipts so the council can track use of the borrowed funds.
What's next: The council approved the temporary borrowing authority and indicated it will return to fiscal questions—expense cutting, revenue options and budgeting—in a future meeting to address the structural issues raised during the discussion.
