Despite a projected revenue downturn due to the pandemic, Columbus City Council voted 5-1 Tuesday night to issue a $6.5 million general obligation bond for street paving.
Ward 2 Councilman Joseph Mickens, who warned of the city’s financial situation, was the lone dissenting vote.
The majority of the council, including Ward 4 Councilman Pierre Beard, Stephen Jones of Ward 5 and Bill Gavin of Ward 6, have said they believe the need for street paving is imminent.
“The roads are in horrible condition, there are roads that have never been paved,” Beard said. “Going forward, I feel like everything is going to be okay to cover the expenses.”
The bond must be paid off in no more than 15 years, according to the resolution the council passed Tuesday. The city can choose to pay it off in 10, 12 or 15 years, Financial Adviser Lynn Norris of Tupelo told the council.
If the city chooses to pay off the debt in 10 years, the interest rate is projected to be 3.25 percent and the city would have to raise the millage rate by 1.25 mills every year from 2022 through 2025, The Dispatch reported. The 12-year bond option, which would require the city to pay a projected 3.5-percent interest, shares the same millage rate increase schedule with the 10-year plan. The 15-year option, with an estimated 3.6-percent interest rate, would allow the city to raise one mill each year for 2022, 2023 and 2025, Beard told The Dispatch.
The council must come back and vote on which plan they hope to move forward with, Beard said. Norris recommended the city pay off the bonds in 12 years. Following that plan, the city is estimated to pay roughly $200,000 per year, Norris said.
The city could use the Internet sales tax revenue, which is by state law dedicated to road-related infrastructure expenses, to pay toward the bond debt, Norris said. The city has received $125,000 from the revenue this year, city engineer Kevin Stafford said, and is en route to receive another $125,000. The annual revenue will double each year until it reaches approximately $1 million per year.
Bond attorney Steve Edds told the council he had consulted a state economist, who felt “strongly” that “the state would experience significant growth in the third quarter of this year.”
“Obviously, things could change, the crisis could worsen,” Edds said. “I was very surprised, actually, by how strongly he felt.”
But the city’s ability to pay existing debt worried other council members.
As of March, the city had accumulated $36.4 million of debt and carries roughly $14 million of debt in street paving alone. Meanwhile, the city received $703,143 in sales tax revenue in May, marking a $89,000 drop from that in April, Chief Financial Officer Deliah Vaughn told the council in June.
Box, despite voting in favor, said he is still reserved about borrowing millions of debts amid a pandemic.
“I’ve expressed my fears and concerns about what we are about to do. I know we need paving badly,” he said before casting the vote. “I see the downturn in sales tax revenue. …We are entering this in the face of a crisis for our state.”
Mickens told The Dispatch he also understands the need for street paving. But with the gloomy outlook due to the pandemic, he said, he doesn’t see why the city can’t wait until it actually receives enough revenue to pay its debts.
“We are going on a road that we haven’t been down before,” he said of the financial impact of the pandemic. “They are putting the cart before the horse. Get the money first, then you make the move.”
Vacant positions filled despite hiring freeze
Mickens was also the only dissenting vote on the promotion of a maintenance technician in the Recreation Department to Recreation Maintenance Supervisor, which passed the council 5-1. The council also unanimously approved the hiring of two police officers to replace two who recently resigned from the department, said Police Chief Fred Shelton. The department will now have 51 officers, he said.
In the wake of a projected 40-percent drop in the city’s sales tax revenue, the council implemented a hiring freeze in late April as a cost-saving measure, which will last through the year unless the council decides otherwise. The freeze prohibited new hires across city departments, including the police, fire and public works departments.
Smith told The Dispatch the promotion in the Recreation Department — which was not affected by the hiring freeze — would not generate extra cost to the city, since the salary level will remain the same. The council approved of the police department hires, he said, because the hiring freeze allowed for a maximum of 54 officers for the police department, and the two hires Tuesday night would bring the total number of officers to 51.
But Mickens, who voted in favor of the hiring freeze in April, said the policy was never meant to prevent additional costs, but to save unnecessary costs. He told The Dispatch he thinks the city should not spend on vacancies that could be filled later when faced with financial uncertainty.
“It’s not about generating more, it’s about saving,” he said. “Why did we take a pay cut? Why did the council take a pay cut? …To save money. If we ain’t going to fill that position right now, why don’t we wait until everything is back in place?”
Yue Stella Yu was previously a reporter for The Dispatch.
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