Tuesday, April 28, 2015

Buy Now Pay Later


The following are the steps to purchase equipment/vehicles in our community:

 1.  Department Heads puts items on the Capital Improvement Plan.
2.  Department Heads place an approximate cost to it.
3.  During the budget process, Department Heads lobby for these items to
                  be included in the budget.
4.  Town Council approves purchases in the proposed budget.
5.  Department Heads request permission to solicit a bid on the item.
6.  Once the Department Heads have the bid, they request permission to
                  purchase the item from the Town Council.
7.  Once the Town Council approves the purchase of the item, the town
      seeks financing for the item.
 8. The town secures financing and enters into a contract spreading out the
      payments over years at an additional fee.

This is one of the reasons; the town is currently in a financial situation it is in.  If the funds were approved during the budget process, and approved for purchase at the bid price, why do we need to finance the purchase?  Financing the purchase means that the taxpayers are going to have to pay an additional payment and pay interest for the duration of the loan.  Right now, according to the town, the taxpayers are forced to pay $63,950.00 in Interest on $273,050.00 Principal.

What is even worse is that the town reused the same money and puts the town into debt further.  In the example above, once financed the town only pays the principle and Interest for the first year.  Example:  Bid was for $54,000.00 and the first years installation is for $4,000.00 the remaining $50,000.00 remains in the General Fund to be used for the next purchase or should I say the next financed item.

The people you can thank for this brilliant concept, are former Town Manager Stephen Eldridge, former Chairman Michael Bowie and former Finance Director Jessica Maloy.  This year alone, the town has a debt service of $156,757.00.  This method of paying for everything through financing, except in the case of an
emergency, has to stop immediately.  Once the funds have been approved for an
 item it needs to be purchased in full.  Because the town is under contract for
 purchases already financed; the only way to recover is through attrition.

The Town Council needs to put an immediate stop to this procedure and direct the Town Manager there will be no more financing of equipment/ vehicles except in emergencies.  Emergencies are determined by the Town Council and the Town Manager.

Call your Councilors and the Town Manager if you agree. Put us back on track!

Larry Fillmore