City's financial woes impact East Carbon's tentative budget
|Bulldozers move solid waste dumped at the East Carbon Development Corporation landfill site in 2002, when the operation was abuzz with activity. However, activity and tonnage of refuse accepted at the ECDC facility have slowed substantially due to the opening of a new landfill in Tooele County. The slowdown at the ECDC landfill has resulted in significant employee layoffs and negatively affected the economy of East Carbon City.|
For years, the East Carbon area languished due to a lack of industry to support the city's operations after the mines closed and Geneva Steel left town in the 1970s.
In the 1990s, the city's hopes and offers were renewed with the addition of the Sunnyside Co-Generation Power Plant and the opening of the one of the largest landfills in the United States - East Carbon Development Corporation.
East Carbon residents and elected officials started to believe the town would not only survive, but thrive as empty houses gradually filled up and East Carbon City began to receive tippage fees for every ton of refuse accepted and stored at the landfill.
East Carbon's potential tippage fee monies were pledged to secure funding to install sorely needed new infrastructure in the city.
But now, the town is facing hard times again.
The money that ECDC was generating for East Carbon in tippage fees has nearly disappeared due to the opening of a new landfill in Tooele County.
The Tooele facility has taken away much of the ECDC operation's business. And the jobs that went with the landfill in East Carbon are also disappearing.
"ECDC laid off three more people in the last couple of weeks," pointed out Mayor Orlando Lafontaine during a regularly scheduled East Carbon City Council meeting on Tuesday. "One of them was dismissed just yesterday (Monday)."
The situation has created a scenario where East Carbon is having a difficult time paying the various agencies that lent the money to fund the infrastructure.
The mayor indicated that the town has already renegotiated some of the interest rates on the loans and East Carbon officials have asked for several extensions on the payments.
The agenda for the June 13 council meeting included a review of past East Carbon audits and the approval process on next year's city budget.
"We may be going back and asking for a moratorium on payments for three years so we can build a base in our city coffers from which to pay the payments in the future," stated the mayor.
The discussion about problems with finances has become a regular topic at the city council meetings.
On Tuesday, the discussion about the city's ongoing financial woes was precipitated by an audit report presented by Lane Peterson.
"This is a substantially different report from what you had before for the 2004 year," said Peterson. "And as I have been doing the 2005 audit, which you will get on Friday to review, I have found that your town had a general fund balance of $18,088. That is well below state minimum requirements."
The independent auditor pointed out that the requirements for the town are higher based on grants East Carbon has received.
Peterson said he didn't expect the requirements to decrease because other grants for the city are expected to be coming in the future as well.
Following the independent auditor's comments, the council jumped into a discussion about Eats Carbon's finances and the problems the town is currently facing.
During the discussion, city officials learned ECDC representatives have projected that the company's total tippage for the year will be less than the tonnage the landfill used to accept at the site in one month.
"It certainly will be up to you. But there will have to be some kind of adjustment to bring your budget into line with state requirements," pointed out Peterson. "That may have to be through some type of revenue generation such as raising property taxes."
The independent auditor told the council that East Carbon City's long-term debt obligation registers at $3,388,000.
Peterson's statement prompted the mayor and city council to explore East Carbon's potential financial options.
"The city could go into default with what has been going on," indicated councilmember Dave Maggio.
"Actually, I would vote for that before I would raise the property taxes on the 16 widows who live on Denver Avenue," added Maggio.
But the mayor said he thought, with renegotiations, that the town could survive with having to default on the city's debt.
"If we can get the lenders to swallow the interest on these debts, the savings would be astronomical," noted Lafontaine.
After accepting the audit report from Peterson, the councilmembers adopted a tentative budget for East Carbon City for the 2006-2007 fiscal year.
The expenditures projected in the city's tentative 2006-2007 budget totaled $919,850.
The tentative budget also highlights how much money the city has been losing and will continue to lose with the decline of ECDC.
According to financial data reported in 2004-2005, ECDC paid $826,587 in tippage fees to East Carbon.
In 2005-2006, the company is expected to have paid $575,000 in tippage fees to the city by June 30.
During the next one-year period, ECDC's projected tippage fees to the city are projected to total $243,000.
"We have a difficult situation," pointed out Maggio later in the city council meeting. "You know when you are broke, you don't go to the movies. You have to be frugal about where you spend your dollars."