City passes ordinance to reduce general fund debt

DeKalb+city+council+members+%28left+to+right%29+Bill+Finucane%2C+Tracy+Smith%2C+Greg+Perkins%2C+mayor+Jerry+Smith%2C+Scott+McAdams%2C+Mike+Verbic+and+Tony+Faivre+meet+Jan.+27+at+a+city+council+meeting+after+a+lower+bar+age+limit+ordinance+was+proposed+at+a+Jan+13.+meeting.

Kierra Frazier

DeKalb city council members (left to right) Bill Finucane, Tracy Smith, Greg Perkins, mayor Jerry Smith, Scott McAdams, Mike Verbic and Tony Faivre meet Jan. 27 at a city council meeting after a lower bar age limit ordinance was proposed at a Jan 13. meeting.

Kierra Frazier, Senior Reporter

DeKALB — An ordinance to reduce the city’s general fund debt obligation for one year passed unanimously at Monday’s meeting. 

The general fund is used to account for all financial resources traditionally associated with governments that aren’t required to be accounted for in another fund, according to the FY20 city budget

Reducing the debt owed in the general fund debt in the FY21 budget would save the city $1,795,554 in principal and interest payments in FY21, which reduces the general fund spending by an equal amount, according to the Sept. 28 city council agenda

This means that debt payments on the relevant bonds for the city will be moved from FY21 to FY28, FY29 and FY30. An additional $381,277 will be accumulated over the next 10 years to the city’s obligated debt. 

The city is choosing to make this move as a result of the pandemic and the effects it’s had on the city’s general operating revenues, according to the agenda. Since the general operating revenue will see a decline, so will the city’s general reserve balance. 

“The estimated $4.5 million drop in general operating revenues, offset in part by an expected infusion of $500,000 in federal Cares Act funding by the end of the calendar year, has posed very substantial challenges,” the agenda reads. 

City Manager Bill Nicklas said there are no “easy decisions” when it comes to making decisions on the city’s budget due to the fiscal restraints that the pandemic has brought.

“We’re basically taking $1.8 million out of the spending side of the budget for one year only, pushing it back at a point where, frankly, we will be relieved to see what our debt service is, and it’s going to be about a third of what it is now. “The trade off is that we have liquidity for the unexpected.” 

Seventh Ward Alderperson Tony Faivre said the ordinance was a great opportunity so the city could maintain a general reserve balance. 

“I’m looking at it as to have a reserve account that we’re going to use on a rainy day, we’re sitting in the middle of the rain,” Faivre said. “The problem is we don’t know how long the rain will last, we don’t know how deep the water will get. As of today, there’s no confirmation we’re gonna have the vaccine at the end of the year.”