The McComb city board voted 4-2 Tuesday to borrow $1 million against anticipated property tax revenues as a short-term solution for the city’s financial woes.
Under state law, the city can borrow up to $1.5 million of its anticipated $3 million in property tax revenues. The money must be repaid by March 15.
The vote, with selectmen Melvin Joe Johnson and Robert Earl Smith opposed, came near the end of Tuesday’s 41/2-hour board meeting.
The board unanimously voted to table an earlier agenda item to determine the best course of action to handle the city’s projected $1 million shortfall. Selectmen cited the need for fresher minds and seeing detailed figures to discuss the three other options before them.
Those options include reducing pay by 20 percent across the board by instituting a 32-hour work week, cutting city payroll 10 percent or laying off at least 30 city employees.
The board voted 4-1 at its special called meeting on Jan. 4, with Selectman Johnson opposing and Smith serving as mayor pro tem, to authorize city attorney Wayne Dowdy to draft a resolution to borrow the funds to handle this week’s $100,000 accounts payable docket and $300,000 payroll. At the time, the city had $114,145 in its general fund.
Earlier in the meeting, Mayor Zach Patterson said he wanted to clear the air on some things discussed in the Jan. 4 meeting. At that meeting, Lockley told the board Patterson instructed him to call the meeting. Johnson, the mayor pro tem, protested calling the meeting to order, noting that Patterson was in the city but not at the meeting.
The board was told Patterson picked up documents and the notice of the special called meeting earlier in the day at City Hall. However, he was not present at the meeting.
Patterson said he did not tell Lockley to set up the meeting. He also said state law requires officials to find the mayor if he does not appear for a special meeting.
“I said, ‘Why can’t the selectmen who called the special called meeting call it?’ ” Patterson said. “The law says the meeting shall not be held without the mayor present. I was in the jurisdiction; the mayor shall be found. Mr. Johnson was correct.”
Officials also discussed the necessity to borrow the money after Pike County Tax Assessor Joe Young agreed to deliver $650,000 to the city in property taxes earlier than expected.
Lockley reminded the board that the city’s property tax revenues will be about the same amount for January and February, but will take a dive later as fewer taxes are collected.
“If you spend it over three months, as we will, we’re going to be relying on sales taxes,” Lockley said. “If you rely on $650,000 per month, you’re living paycheck to paycheck.”
Patterson said he found it strange that Young would agree to release the funds without contacting the city’s elected officials. Dowdy, who serves as attorney for both the McComb and Pike County boards, said he called Young to review the city’s tax collection agreement, and Young volunteered to release the funds early.
“The decision should be that of elected officials,” Patterson said. “Even with good intentions, you cannot enter into those kinds of discussions (between the city and county), and therein lies a conflict of interest.”
Selectman Danny Esch responded to Patterson, saying, “Joe Young should be applauded for allowing this city to move forward. Look at where we would be right now.”
Lockley later said if the board didn’t want to borrow the money, it could ask Patterson to go to Young to ask him to release the funds early on a monthly basis.
“I didn’t mean to imply the mayor has to get involved,” Patterson said. “If anybody can rein money in here, I’m for it.”
Lockley said the money should be borrowed to guard against any unanticipated event that could further diminish the city’s revenues. He also said he has received three bids for the loan, with the lowest having a 1.91 percent interest rate.
Smith asked the mayor if he believed the city shouldn’t borrow the funds. Patterson said he couldn’t get involved because he did not have the authority, referring to action last year by the board to amend city ordinances on mayoral power.
Patterson did advise the board that the city could face this same predicament after the loan is repaid in two months.
“If long-term fixes aren’t in place, we’re looking at another catastrophe,” Patterson said. “At the end of the day, you’re going to have some tough decisions.”
