The city of Carmel may have found a way to meet its debt obligations and pay its bills for the rest of the year.
The northern suburb’s revenue for the year is millions of dollars short—partly due to Carmel Utilities' failure to pay $1.2 million in fees for shared services—which has prompted the city to look for other ways to pay claims, debt service and payroll for the next couple of weeks.
Last month, Mayor Jim Brainard introduced an ordinance to the Carmel City Council to reappropriate an additional $5.38 million the Indiana Department of Local Government Finance had previously cut from the budget. But the proposal failed at a Dec. 7 meeting in a 3-3 vote.
Under a new agreement that the Carmel Redevelopment Commission and City Council are expected to approve Monday afternoon, the CRC will use $2.9 million from its supplemental reserves to cover a bond payment for the city.
City Council President Rick Sharp said that, if the CRC makes the bond payment, the city will have enough cash to pay the rest of its bills for the year.
As of Aug. 31, the CRC had $3.78 million in its supplemental reserve fund. The commission also has an additional $1.3 million in other reserve funds.
CRC Executive Director Corrie Meyer said the commission had no intention of spending the reserve funds on other expenses before the end of the year.
The arrangement requires City Council approval, according to Sharp, because the CRC is allowed to use the reserve fund only for its own bond payments.
The city will be required to reimburse the fund within 60 days.
Sharp said he worked with Cindy Sheeks, finance manager in the Clerk-Treasurer’s Office, to determine the city had $2.2 million left in cash after distributing payroll on Friday.
Sheeks also confirmed that Clay Township will make a $1 million payment before the end of the year for its fire protection obligation.
“She assured me that’s more than enough money to make our standard obligations,” Sharp said.
Sharp, along with council members Luci Snyder and Eric Seidensticker, voted against the initial funding proposal Dec. 7. It would have dropped the city’s general fund, which serves as its checking account, to nearly nothing.
The councilors criticized the arrangement as unwise financial planning and argued that they warned of the potential shortfall earlier in the year, but Brainard denied the potential for problems.
Some officials were also worried that shortfalls would lead the city to dip into its rainy day fund, which financial advisers recommend to keep at 10 percent to 20 percent of a municipality’s general fund.
Carmel’s rainy day fund has a balance of $8.5 million—about 10 percent of its operating expenses. Tapping into the rainy day fund potentially could harm the city's credit rating.
After the reappropriation ordinance failed, Brainard, who was in Germany during the meeting, issued a written statement urging the clerk-treasurer to pay bills as if it were approved. Brainard said he would have the new council retroactively approve the spending in January.
Sharp lost in the mayoral primary election to Brainard, and Snyder and Seidensticker also lost their council seats.
Sharp expects the council to approve the new proposal when it meets at 4:45 p.m.
“The mistake that the mayor and his people made with the last attempt to fix the budget–they didn’t count votes. I count votes,” Sharp said. “I’ve got six confirmations for this meeting. … Of the six, five have committed that they will vote for it.”
Brainard did not return a message from IBJ seeking comment Monday morning.