Vernon To Pay Back Employee Benefit Trust With Financial Trouble Looming

Vernon To Pay Back Employee Benefit Trust With Financial Trouble Looming

UPDATE: Vernon City Commissioners met Tuesday to start on 2015-2016 budget workshops, and to continue tax rate increase proposals. Although no decisions were reached, the Vernon city manager introduced additional funding options to commissioners.

The city is considering an option to help pay off the mounting debt by creating a separate Interest &Sinking tax rate. The fund is designed to help retire debt, and city officials put together some of those number for commissioners to weigh in on.

The current year debt service for the city comes to more than $1.3 million, according to the 2015 effective tax rate worksheet. If 25 percent of that debt service was supported by the I&S tax rate it would increase taxes from $0.38 to $0.46. However, as the percent covered by the I&S rate increases, so do taxes. If 100 percent of the debt service was supported those taxes would increase to $0.71.
Commissioners will also discuss increasing property taxes. The $0.38 can only be increased 8 percent without triggering an election on the taxes. 
City officials made not decisions concerning any rate increases. They plan to carefully weigh options and decide the best way to move forward. City leaders will continue to work on the budget next week. The commissioners will hold another meeting Tuesday, August 4 at City Hall. That meeting is at 5:30 p.m.

6/23/15

Vernon Commissioners will soon work to pay back nearly $1 million to the city's Employee Benefit Trust. The city started taking from that fund to support financial failing's years ago without commission approval.

Tuesday commissioners started making plans to move forward.  Vernon will be forced to pay nearly $9,000 to the EBT fund each month.

The commissioners actually authorized the loan that was technically unauthorized and unsecured when the money was taken out. That's because it was not brought to the attention of commissioners at the time of withdrawal.

The first thing they had to do was authorize the loan. They did that so they could set a repayment schedule and interest rate. The city approved a 2.5 interest rate for the fund, creating a new yearly expense of $100,000.

Although commissioners are working to pay back the debt, they aren't out of the woods yet. Even after job slashing and budget cuts of $500,000, the city still does not have enough money to fund general operations.

The city will have to transfer $500,000 over from utilities to fund general operations.

“That means that our general fund is still, we're spending $500,000 more than we have,” said Vernon Mayor Joe Rogers.

It was discussed as commissioners worked again to amend the city's 2014-2015 budget. The will continue that amending process. That means the city will go through more budget workshops and generate additional ideas on how the city could cut expenses.

The news comes as more financial problems surface. The city is now facing a $148,000 workers compensation claim.

 It's another amount they will have to tack onto their budget and another monthly payment of about $1,000.

Brittany Costello, Newschannel 6