The Clinton Herald, Clinton, Iowa

Local News

November 21, 2012

City seeks funding for equipment

Deficit in fund was projected in 2010

CLINTON — The city of Clinton may need to pursue a $1 million bond to pay for already purchased equipment for the automated trash pickup system.  

City Finance Director Jessica Kinser asked Internal Operations Committee members on Tuesday if they would like to add the $1 million on to a taxable refunding bond to pay for debt associated with the solid waste equipment that had been purchased in the two previous fiscal years.  

“We cannot essentially pay for the equipment that was bought,” Kinser said.

Committee members questioned why the city would need to utilize the bond when the solid waste equipment replacement reserve fund had been established a decade ago to cover the costs. That fund had a $1 million balance in fiscal year 2011, city budget documents show.  

“When the council was originally told over 24 months ago that the money was there to pay for the trucks, that it was basically a wash of funds that were existing, they weren’t there?” Council member Jennifer Graf asked.  

“The statement was made in public session in a council meeting that the money was there, there wouldn’t be debt arising from the purchase of those vehicles,” she said.  

The city did have money to cover the cost of some of the equipment that was purchased. In November 2010, the city purchased recycle trucks for $451,992, leaving the balance of the solid waste equipment replacement reserve fund at $548,441.

However, according to Council meeting minutes from Nov. 9, 2010, former Public Works Director Gary Schellhorn explained to Council members that the purchase of an additional $1.27 million of equipment would leave the equipment replacement fund with a negative $720,727 balance. Schellhorn stated the city would need to save $100,000 per year to pay the finance costs.  

Schellhorn also stated at that time his department was operating with a negative balance of about $104,000, which in fiscal year 2009 stopped the city’s annual practice of putting $100,000 into the equipment replacement reserve fund.  

According to the minutes, Schellhorn stated the $9.25 monthly fee for solid waste would generate $1.46 million based on collection from 5,000 customers. His budget at the time was $1.33 million.    

During the Nov. 9, 2010 meeting, the Council unanimously approved the motion to purchase the equipment from Elliott Equipment Company: three automated trucks, 5,000 garbage bins, 5,000 yard waste bins and computer equipment, leaving the fund negative by slightly more than $720,000.  

Since the $1.27 million was spent, the $100,000 a year has not been saved due to a lack of revenue.

Further compounding the issue, the city continues to purchase solid waste and recycling bins for residents and invoices the purchases to the replacement fund. The balance of the fund is currently negative by approximately $1 million, according to Kinser.  

“You can either borrow for equipment when you need a replacement or you can save for it along the way and this is one where it sounds like there was a misunderstanding of what was actually happening in the cash in this fund,” Kinser said during the IOC meeting Tuesday.  

Committee members decided not to move forward with the $1 million included in the bond to pay for the equipment.  Instead, they moved to wait for the solid waste study results, which will be revealed in January.

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