Temple City Council members approved a $6.1 million budget for 2018 on Monday night, but not without some criticism from an outgoing council member.
The three-part budget includes a $623,000 transfer of SPLOST funds to balance the water-sewer fund portion, the second consecutive year such sales tax revenues have been used in such a fashion.
The plan provoked a strong dissent from Ward 1 Councilwoman Penny Ransom, who criticized spending the money on the debt on the revenue bond that paid for the city’s wastewater treatment plan.
Revenues from water bills are supposed to make the water-sewer fund self-sustaining, but the system has consistently underperformed, and the city is hoping to refinance the bond before a $4.6 million balloon payment comes due in January 2021.
Ransom, whose term of office ends at the end of the month, said the SPLOST revenues were being applied incorrectly to reduce the debt. She also implied that financial institutions would be reluctant to refinance the bond at a suitable interest rate, since the city has been relying on the SPLOST funds to make its current debt payments.
“There’s a better way to do this,” she said at several points during the meeting, and urged the council not to “box in” the new council next year with the current arrangement.
She pointed out that the council could allow the current budget to carry the city forward for a few months, giving the city’s new mayor and new Ward 1 representative an opportunity to hammer out a new budget that would better address the issues.
The council voted on the budget during their regular monthly meeting, the last such time the current council is expected to meet.
When the council meets in January, current Mayor-elect Michael Johnson will preside, replacing Mayor Lester Harmon who, like Ransom, chose not to seek re-election this year. Ransom will be replaced by Terron Bivens, who formerly represented Ward 1.
The budget package passed Monday night was in three parts, totaling $6,151,190.
The general fund budget, which covers the operations of the city — including funding such departments as the police — balances $2,910,089 against the same amount in expenses. That portion of the budget was passed by the council with a vote of 4-1, with Ransom opposed.
The $68,896 Capital Fund budget will go to nine road projects that the council also voted to approve. That portion of the budget was approved with a vote of 3-2, with Ransom and Ward 3 Councilman Todd Rothwell opposed.
Rothwell and Ransom were also the only two council members to oppose the water-sewer budget, which came to $2,549,440. The total budget includes the $622,765 in revenues from the city’s share of the 2015 SPLOST, or Special Purpose Local Option Sales Tax.
The revenue stream from the 2015 SPLOST will come to an end with that tax expires in 2020, one year before the balloon payment on the bond is due.
Refinancing the bond — an option that has been floated several times by city officials — will depend on getting a favorable interest rate based on past performance of the enterprise fund. The revenues are supposed to be 1.05 times higher than the system’s operating expense, but the revenues have consistently underperformed that level.
This is the second year that Temple has spent SPLOST revenue of debt service, which means those revenues have been unavailable for capital projects.
In a letter to the council submitting the budget, City Administrator William Osborne said that “finding a long-term solution to handling the water and sewer debt is of paramount importance in 2018.”
Water customers in Temple could see an increase in their water and sewer fees next year, as the city absorbs an increase in the fee the Carroll County Water Authority charges its municipal customers. That increase will amount to 20 percent, or an additional $110,000 per year.
To meet that expense, the proposed budget anticipates increased water and sewer fees, although such increases have not yet been approved by the city council.
Osborne’s letter to the council states that adjustments in sewer rates and “some other adjustments in water billing practices” should be considered by springtime.
The general fund budget anticipates $2 million in tax revenues for the city, with the two largest sources being property taxes and LOST (local option sales tax) revenues. The city also expects $275,000 in insurance premium taxes, and fines and forfeitures through the municipal court are expected to create $450,000 in revenue.
Public Works will receive the largest share of money from the general fund — $1.7 million. The city’s Police Department will receive $1.1 million.