Watch Now: Bloomington to Weigh Cash Payment for Equipment Purchases | Politics
BLOOMINGTON – Elected officials will vote on Monday to change the way the city pays for new vehicles and heavy equipment.
Bloomington City Council, at its first meeting in August, will consider a proposal to use cash, rather than credit or financing, when funding any capital purchases made in the year ending April 30, 2022.
These purchases will total $ 3,109,902, according to a staff memo. Covering the $ 3.1 million figure with cash would save the city more than $ 200,000 in interest costs over the term of the initially budgeted leases.
“Capital purchases are typically large amounts and avoiding financing will result in significant savings for the city and taxpayers by eliminating interest charges and other associated financing costs,” the memo said.
The money is said to come from the city’s financial reserves, which are exploding to around $ 26.5 million. After withdrawing the $ 3.1 million in cash, the city would still have $ 23.4 million in the bank by the end of fiscal 2022.
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âAs with personal finance, it is more often than not more fiscally responsible to save and pay for items rather than ‘bill’ when possible,â the memo said.
The city’s chief financial officer, Scott Rathbun, detailed the proposal at the July 26 council meeting, explaining that the city “came out on top” in fiscal 2021 due to federal funding offsets and savings from reduced expenses.
These surpluses allowed the city to use money to pay for equipment purchases in fiscal 2021, Rathbun said.
The pursuit of the cash-only strategy in FY2022 “will be a major step in moving towards the total elimination of funding for our equipment,” said Rathbun.
âWe are very fortunate to have strong reserves for the city,â said Rathbun. “We want to use these reserves proactively to take a step forward from the perspective of the city’s financial strategy and apply these additional reserves that we plan to add to the capital lease for the coming year. “
This move would come as the last financial game for city leaders in an effort to save Bloomington taxpayer dollars.
In February, the council agreed to refinance and combine two outstanding bonds into a single $ 3.6 million bond, a move Rathbun said would save the city $ 559,000.
The new bond of $ 3,639,000 will be refinanced at an interest rate ranging from 0.29% to 0.69%, with an average rate of 0.57%, according to a memo from the city. It will also be paid in full by June 2027.
Rathbun said the city was able to get such low interest rates on bonds due to “good financial management” which resulted in the city receiving a strong double A bond credit rating among rating agencies.
The board adopted in April a record spending plan of $ 251.7 million for fiscal 2022, codifying a total increase of 9.3% from the budget of $ 230.3 million for fiscal 2021.
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Contact Timothy Eggert at (309) 820-3276. Follow him on Twitter: @TimothyMEggert