Cash flow deficits are experienced by many cities when revenue disbursements, particuarly from the State of California, don’t coincide with cities’ expected obligations. Property tax revenues represent the largest revenue source for the City and are paid semi-annually, while transient occupancy taxes come in second. TOT is paid quarterly.
But payroll and other expenses continue all year long, and temporary cash deficits, according to City finance staff, are usually largest in November. Pacific Grove expects just such a deficit by December, 2009 in the anticipated amount of $2,718,000.
To meet their needs, many cities pool together and take out short-term (one-year) tax-exempt loan notes. Pacific Grove, in fact, participated in just such a program in July, 2008 for fiscal year 2008/09, in the amount of $3,315,000.
City Council approved a resolution authorizing the City to issue TRANs for 2009/10. The interest rate is expected to be 1.25 percent.
