City to simplify borrowing practices

Morgan City officials plan to change the city’s practice of borrowing from multiple city funds to cover expenses where needed and, instead, borrow cash from a bank through one line of credit.
The city council approved a resolution Tuesday to take out a $2 million line of credit for 12 months at an annual interest rate of 4 percent. City officials intend to get the line of credit through M C Bank.
Mayor Frank “Boo” Grizzaffi proposed the resolution because, historically, the city runs into “cash flow issues” near the end of each fiscal year. City officials have used money from different city funds “to try to make it to the end of the year,” the mayor said.
“That’s not a good business practice,” Grizzaffi said. “It’s frowned upon by the auditors. And it creates a situation where when you take the money out of certain funds that are meant for other things, then you can’t get the other things accomplished.”
Having a single “line of credit established for those shortcomings at the end of the year” is a better business practice to have than “having to pay back 10 different funds,” the mayor said.
Grizzaffi doesn’t anticipate that the city will come close to actually borrowing $2 million in a year, though, and probably won’t end up borrowing over $1 million annually.
By passing the resolution, the city will be able to get its application onto the State Bond Commission’s December meeting agenda, said City Finance Director Deborah Garber. The council can then adopt an ordinance pertaining to the line of credit and accept the bond commission’s approval in January.
The line of credit would then be effective from Feb. 1, 2017, to Jan. 31, 2018, Garber said.
During Tuesday’s council meeting, the council adopted the city’s 2017 budget for the fiscal year beginning Jan. 1. The budget includes $37.8 million in expenditures compared to the 2016 amended budget of $33.2 million.
The 2017 budget includes $36.1 million in projected revenues, while the 2016 amended budget had $33.6 million in revenues. The 2016 amended budget will be up for adoption in December.
Included in the 2017 budget are about $2.4 million in employee health insurance expenses and revenues that weren’t in the 2016 budget because the city decided to go with a self-funded health insurance plan. In that type of plan, the city manages its own health expenses and premiums paid instead of having an outside company do so, Grizzaffi said.
Grizzaffi said in September during his 2017 budget message that the city’s budget reflects a predicted downturn in revenues for the second straight year, and city officials have adjusted how money is spent as a result. No new capital projects were included in the 2017 budget.
Amended utility operations expenses for 2016 came in at $14.5 million, much lower than originally expected, due to low energy prices, Garber said. The 2017 budget projects more typical energy prices with $17.2 million in the budget for utility operations, she said.
Over the next year, the city projects for its fund balance to decrease from $27.8 million to $26.1 million.
Also on Tuesday, the council approved a liquor and Class B beer permit for Trang Ribardi, owner of Fifth Street Store, located at the corner of Fifth and Everett streets in Morgan City.
Ribardi is the sister of former Morgan City Housing Authority Chairman Victory Ho, who was arrested Aug. 18 on drug charges and on the charge of distribution-manufacturing-sale-possession of synthetic urine.
Ho’s arrest was one of three arrests St. Mary Parish Sheriff’s Office detectives made after searching a Fifth Street business and Fig Street home, a sheriff’s office news release said.
Several councilmen asked what Ho’s role will be at the store.
Ribardi said Ho operates a check cashing business in the same building as Fifth Street Store, but he won’t be handling any alcohol or tobacco products.
Councilman Ron Bias said the council should give Ribardi a chance to show that she can operate the business “fairly, honestly and be an asset to the community.”
In other business, the council
—Approved a tennis pro contract with Scott Rhodes to administer the city recreation department’s tennis program.
—Approved a change order on the city’s wharf rehab project in the amount of $265,170 to provide for composite decking, 750 clips to tie down the dock and 27 additional pilings. The wharf project is about 60 percent complete, Grizzaffi said.
—Approved a resolution to oppose any lawsuits filed by Gov. John Bel Edwards, Attorney General Jeff Landry and the 16th Judicial District Attorney against oil and gas companies for and on behalf of St. Mary Parish regarding coastal erosion and coastal permits. Bias was the lone dissenting vote on the resolution.
—Accepted the 2017 Class A & B liquor license renewals.
—Accepted the appointment of Tommy Minton to the recreation commission.