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Peekskill manager proposes short-term $3 million tax anticipation note to smooth cash flow
Summary
City finance staff told the council the city faces a midyear cash shortfall and proposes issuing a $3,000,000 tax anticipation note in February to be repaid in August to maintain sustainable balances; the city manager and finance staff said the timing gap is driven by retirement payments and tax-collection cycles.
Tony, a city finance official, told the council the city’s cash balances ‘‘go to kind of an alarming level’’ without short-term borrowing and proposed issuing a tax anticipation note (TAN) in February and repaying it in August.
"I did a review of the cash flow between '22 and projected into 2025. Without issuing the ... tax anticipation note, the cash balances in the middle of the year definitely go to kind of an alarming level," Tony said. He added that, based on his projections, "we would probably pay that back in August of next year," and that issuing the note would leave a sustainable balance during the gap months.
Tony explained the timing mismatch: retirement bills are typically paid in December (and sometimes deferred to February) while property-tax revenue does not begin arriving until April, creating a roughly four‑month shortfall. He estimated April receipts historically total about $18,000,000 and noted a second tax installment in October also provides a large inflow.
Council members asked clarifying questions about who receives tax bills and the mechanics of escrow payments; Tony confirmed the city sends tax bills and that mortgage companies often receive them and pay from escrow accounts. The council did not take a final vote on the TAN at the Dec. 23 meeting; the matter was presented as an item for council review.
