02 Council Min 2-14-05.wpd - Laserfiche WebLink

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Regular City Council Meeting February 14, 2005 Page 8 employees. When the fund first started it was noted as an internal service fund. The way an internal service fund is suppose to work is that an employee would put in a certain amount of money into that fund on a monthly basis and they would use that money to pay off the claims. This has always been a problem because there was never enough going in the fund per employee. Periodically, it gets in a real deficit position and has to be corrected. It was done in the latter part of May of this year. What Council did at that time was set up a trust fund - a little bit different format than one we’ve always had because this one has legal recognition. The Insurance Department of the State of Texas is interested in it. There is still a deficit in the fund balance. In May, the general fund kicked in about one and a half million and the water and sewer fund kicked in a couple of hundred thousand and what that was suppose to do was make that old fund hold so that we could start out from point zero in this new trust fund. There was discussion regarding funds owing money to other funds within the City of Paris and the report reflecting accounts receivable for the fund that is owed money. There was further discussion of the City of Paris making payments every month with borrowed money. Tom Hensel explained the general fund on page 6. Mr. Hensel stated if you are making the budget, then it all that works out okay. Mayor Fendley stated it extends the budget. Councilman Wilson said it does not matter about the budget - you got in 18 million and spent 20 million - that is a 2 million deficit. Councilman Wilson said the problem was that a budget was passed that started off in the hole 1.7 million dollars. Tom Hensel said that was right. Councilman Wilson said what was not said was that they were presented a budget that we are going to have to use nearly 2 million dollars out of your reserve to fund this budget. Therefore, everyone in this City thought they were passing a balanced budget. Tom Hensel said the City was on budget - it came out to be what was expected. Discussion of bond funds, certificates of obligations, restricted cash funds, equity, and the sinking fund. Councilman Bell said that under current operations if we do this again this year then we have 2 more years and this City collapses on itself. Tom Hensel replied that the City will not have much to spend. Councilman Wilson’s stated his understanding was that the City had to have so much reserve and if you indebted the City, you had to make sure you were making this much money and not spending too much. However, Councilman Wilson now understands that the State has a cover for the bonding companies and that they can loan you all the money in the world because they can force you to raise the taxes.