As it does every year, the Seymour City Council approved an ordinance to allow borrowing from the city’s municipal sanitation utility.

This year, though, there were two differences. The ordinance was introduced a little later than usual, and it was shared which city department would benefit from the as-needed funds.

Mayor Matt Nicholson said when he was on the council before becoming mayor, the ordinance was the first one voted on each year. This year, it was Ordinance 5, Council Bill 6.

Councilman Chad Hubbard said in previous years, he didn’t recall the ordinance stating the monies would go toward the Seymour Parks and Recreation Department as needed. Nicholson said historically, the blanket term “borrowing” has been used.

When Councilman Jerry Hackney, chairman of the finance committee, introduced the ordinance during the Feb. 13 council meeting, he said the borrowing would specifically be for parks and rec.

“It seems like we have a problem there every year, and we approve this ordinance every year for that,” he told the council.

Clerk-Treasurer Darrin Boas said early in the year, parks and rec buys supplies to begin working on the ball diamonds, including chalk to line the fields.

“They incur a lot of earlier expenses getting ready for that stuff, and the way our tax distribution falls, you get X amount this part of the year and X amount of money that part of the year,” Boas said. “They spend heavy in the first quarter getting ready for stuff and then kind of ride it out the rest of the year.”

According to the ordinance, this action by the council allows for a temporary loan of up to $5 million from the Seymour Municipal Sanitation Utility to the general fund and parks and rec fund to be used for expenses until the city receives its property tax distributions, which are in June and December each year.

While the amount borrowed each year varies, Boas said this past year, parks and rec only borrowed around $200,000. The $5 million amount is established so there’s just a one-time ask each year.

The sanitation utility is used because it has monies available that can be borrowed by the city on a temporary basis. According to the ordinance, the loan shall be without interest, and the entire amount borrowed has to be repaid by Dec. 31 out of property tax revenues distributed to the city.

The council approving the ordinance authorizes the mayor to sign a tax anticipation warrant on behalf of the city as a prerequisite to each draw down.

Hubbard asked the mayor if there is a plan to stop borrowing from the utility, and Nicholson said yes.

“If we stick to the plan, ‘24, ‘25, somewhere in there, we should have them up to their cash on hand version, as well,” Nicholson said.

When he became mayor in 2020, Nicholson came up with three steps to get to 180 days of cash on hand.

The first step was to get all of the city’s accounts to where the overall number was equal to 180 days. Why 180? Because of the property tax reimbursements from the state that come twice a year.

“At the end of last year, we reached 186 days cash on hand in the general fund,” Nicholson said, noting that was up 34 days from 2021. “The general fund was Step 2 of that process because it is where most of our expenditures come from.”

The lowest point was 11 days of cash on hand in 2011, so Nicholson said huge strides have been made to increase that.

Also, he said the rainy day fund was around $6,000 during his tenure on the council and as mayor, but this year, Boas was able to take revenue the city wasn’t expecting and put it into the rainy day fund to put it up over $150,000.

“As time goes by, we’ll be able to get that number up to where when we do have a bad time, we’ll be able to have a little bit of cushion there instead of being as stressed as we were back in 2011,” Nicholson said. “It avoids borrowing from (the sanitation utility) when we get to that 180.”

The third step in the mayor’s process is getting parks and rec to 180 days of cash on hand.

“Once we get parks and rec up there, then we’ve accomplished all three, much better spot, the borrowing is gone, rainy day is growing, everything is going in a good direction,” he said. “Toward the end of ‘24, we should be able to reach that 180 days cash on hand for parks and rec, as well.”