Friday, Jul. 20, 2012
Council OK’s shifting $1.2M from water fund to general fund
By Thaddeus Miller
tmiller@losbanosenterprise.com
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ReprintLOS BANOS City Council unanimously adopted a plan Wednesday to borrow from the water fund to save the city more than $500,000 in interest over the next 12 years.
Acting Chief Financial Officer Brent Kuhn, whose employment was extended through June 2013 at the meeting, said the general fund will borrow $1.2 million from the water fund.
“In essence, it’s investing in the city of Los Banos,” Kuhn said.
The increase in general fund cash, Kuhn said, would go to pay down city debt. The savings is realized because less will be spent on interest payments, and the general fund has a higher interest return than the water fund.
The savings will take a bite out of the city’s projected deficit of more than $641,000.
Kuhn said $1.2 million is the worst-case scenario, and he does not expect to use that much.
“In no way will this impede the cash flow requirements of the water fund,” Kuhn said. “We’ll actually be increasing the cash position in the waterfund, eventually.”
The water fund invests $10 million in Local Agency Investment Fund.
Councilman Scott Silveira called the plan a “win-win.”
“The general fund isn’t paying out as much interest on the bonds it has issued, and we’ll be paying more to the water fund than it would be getting in LAIF.”
In other action, City Council approved agreements with the Los Banos Fire Fighters Association, LosBanos Police OfficersAssociation, Los Banos Police Sergeants
Association and other city staff and first responders.
City Manager Steve Rath thanked employees for their part in the negotiations.
“They’re going on four years now with no salary increases (and) no step increases,” Rath said.
In the past four years, various employees have agreed to changes in employee retirement dues and health benefits, and salary cuts.