Loan for Boat Slips to be Paid Off
By Anne McKay Garris
Tonight, at the Clearwater City Council meeting, staff is recommending that a loan, taken out in 2008 to finance the Downtown boat slips, be paid off. After taking out a 20-year loan for $12.9 million to pay for building the boat slips, City Council decided to fund them from other sources with money from building reserves, Penny for Pinellas, and a federal grant. Only $3.9 million of the loan has been used, thus far, and that went towards helping build Beach Walk on Clearwater Beach.
Because the remaining money would not be needed to pay for the boat slips and approximately $300,000 of General Fund money would have to be paid, annually for interest on the loan, it seemed a good idea to pay it off. $3.9 million from the General Fund surplus reserves will be used.
The General Fund money comes from real estate taxes, sales taxes, fees, police fines, and other similar sources. The purpose of the General Fund is to pay for the operation of city government and the city services of police, fire, libraries, and recreation centers. For the last two years, deficits in the General Fund have caused severe cutbacks in services even though the reserves of the fund currently stand at $21 million. Currently there is a great deal of conversation about the need to cut back more in 2010 because of an expected reduction in real estate taxes. We asked a spokesman at City Hall why this is so, when the reserve fund surplus is more than the expected deficit. The answer was it was a Council policy not to spend reserve funds, even surplus reserve funds, for yearly operating expenses. It is all right to spend the surplus reserves to fund Beach Walk since that is a one-time expense, but it cannot be used for salaries or other ongoing expenses.
Although the City will save a total of about $6.5 million in 20 years by repaying the loan, none of the remaining $17.1 million in the General Operating Budget's surplus fund can be used to keep libraries and recreation centers open. This is because Council's policy is that, once our taxes and fees turn out not to be needed in the year they are received, they move into the surplus fund where they can be used for one time expenses only (such as the Beach Walk) and are forever lost to operating our quality of life facilities.
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