A plan to refinance a portion of Atwater’s debt didn’t get the support it would need this week, leaving some city leaders and employees unsure what happens next.
City staff has for a few months pitched the plan, which would use a couple of fire stations, the community center and other city property as collateral to refinance a portion of the city’s $19 million debt owed to the pensions of retired city employees.
The refinancing would allow the city to cap its payments over the next six years for a portion of the pensions, which are set to climb from $2.1 million in 2017 to $2.7 million in 2022, according to Lakhwinder Deol, Atwater’s finance operations manager.
“The city is not generating revenue as fast as that payment is growing,” she said Wednesday.
The plan got two “yes” votes from Mayor Jim Price and Councilman James Vineyard this week, so it failed to go into effect.
Atwater has struggled to pull itself out of debt in recent years, and stepped right up to the edge of bankruptcy in 2012. The looming pension payments present another difficult hurdle, leaders said.
$19 millionAtwater’s pension debt
Councilman Brian Raymond said the council has not been offered other options. “I refuse to go along with this without a more compelling reason than ‘it’s all we have,’ ” he said.
The city would be better off finding some fat to cut from its departmental budgets, he said, and leaders should at least consider privatizing portions of city services. He noted the city is coming up on the end of the fiscal year and will soon be holding budget hearings.
The city has 82 employees, according to staffers, but it wasn’t immediately clear how many Atwater retirees draw those pension dollars.
Initially a supporter of the idea, Mayor Pro Tem Larry Bergman agreed that the city would be better off finding places to cut expenses as opposed to putting city property up as collateral.
“The more I read, the less impressed I was about going that way,” he said.
He went on to say he would not support cuts that would lead to layoffs.
I refuse to go along with this without a more compelling reason than ‘it’s all we have.’
Councilman Brian Raymond
Detractors also noted the refinancing agreement would end in 2022, about the same time as the end of Measure H, a half-cent sales tax that goes to public safety. If not renewed by voters, the city would again see a gut punch to city coffers.
Vineyard said the city needs the help immediately. “I’m looking at this and saying in six years we may not be around because we can’t afford these payments,” he said during Monday’s meeting.
Price said he couldn’t wrap his head around the pushback by the council. He said he hasn’t heard any alternative plans from the other city leaders.
He compared refinancing to a homeowner who refinances his house to try to get his affairs in order.
“I don’t know why this is such heartburn with these folks,” he said. “This is not a plan that has come as a surprise.”