The Inglewood city council unanimously approved a request from the city’s finance department to seek a $10 million line of credit to avoid continued use of the city’s reserves.
“The city has reserves of $57 million,” said Inglewood Mayor James T. Butts Jr. during the 2020 state of the city held last month. In May of 2020 he provided the Daily Breeze a different figure when defending a scorching state audit that revealed misspending.
Inglewood has $54 million in reserves to weather the financial impacts of the coronavirus pandemic without any layoffs, while other cities expect to make dramatic cuts, Butts said.
The city has used the general fund reserves on various programs under the guise of being reimbursed by bonds which raised red flags for the city’s treasurer.
“Keep in mind it sounds good to say the city will be reimbursed these funds because there is NO guarantee the money will be awarded by the Department of Finance and the money will have already been spent,” said Wanda Brown, who was overwhelmingly re-elected to her ninth term of office.
The city has expended close to $28 million of the reserves on various projects since 2019.
$1.5 million on the first-time homebuyers program, $2.25 million on COVID-19 related programs, nearly $10 million to affordable housing developer Thomas Safran and Associates, and $14.3 million to balance the budgets of fiscal years 2018-19 and 2019-20.
Residents are concerned with such robust reserves, does it make sense to seek a line of credit.
“If there are $57 million in the reserves why do we need a line of credit,” asked long-time resident Gil Mathieu.
The mayor called up Assistant Finance Director Sharon Koike to explain the need for the $10 million line of credit, which equates to the nearly $9.8 million the city is short for the current fiscal year.
“We have been awarded grants related to the transit connector (people mover) project and we must first spend the money in order to be reimbursed, which is typically within 45-60 days,” said Koike.
The California State Transportation Agency awarded the City a $95.2 million grant that will go toward the Inglewood Transit Connector Project (ITC Project) last spring. The line of credit will be leveraged against the city’s tax revenue.
The current fiscal year’s first quarter ended last month with a budget review expected in the coming weeks. Because of the COVID-19 pandemic, there are growing concerns the city will have to either furlough or entertain layoffs to solve the pending budget gap. Mayor Butts said the city would revisit this in March.
Although the line of credit is being obtained to ensure the city can use the funds, on the transit project, without using the city’s reserves, there was no mention of whether the line of credit’s use will be restricted solely towards the transit project.
“As an employee I haven’t missed a single paycheck since the pandemic began and if this line of credit keeps our jobs intact we need to thank Mayor Butts,” said a city employee who wished to remain anonymous.
Mayor Butts is up for re-election in 2022 and can’t afford to lose any employees, especially in the police department.
Pingback: Inglewood continues hiring despite revenue shortfall - 2UrbanGirls