Cash flow to dictate rehires

The findings of a future cash flow analysis could determine how soon laid off Neosho policemen and firefighters might be rehired off the revenue of a recently imposed property tax, city officials indicate.

At a Tuesday night budget work session, interim city manager Harlan Moore said a cash flow analysis needed to be performed to determine how a new 42-cent city property tax was going to impact next fiscal year’s budget in relation to rehiring police and firemen that were laid off recently.

“Before I’m going to commit to saying ‘we’re going to hire three firemen back, three cops, whatever,’ I’ve got to make sure that we can afford them,” Moore said.

Taxes collected this calendar year on real property inside Neosho are projected to bring in anywhere from $375,000 to $400,000 but won’t be available to spend until after the tax payment deadline of Dec. 31.

City finance director Martha Mundt said she hoped that a cash flow analysis would be performed sometime within the first three months of the fiscal year, which begins Oct. 1. She also noted separately that next year’s fiscal year budget, once approved, is a snapshot of the whole year.

“That money does not come in the door Oct. 1,” Mundt said. “With the cash flow being sensitive, and not being sure of its stability at this point, we’re going to tiptoe into this next year. And we’re going to be careful in how we spend. Because the numbers we have in the budget are projected revenues for the entire year. We have to spend wisely because that cash flow is still somewhat tentative.”

Mundt also said that city staff needed to determine how much of the cash now accounted for in the general fund should actually be divided off into other funds before having a better understanding of how much is really available and where.

Neosho Mayor Richard Davidson noted that until reserves are built up, “we are at the mercy of revenue flowing in to determine what we can pay out.”

Later, an unidentified audience member asked if the city did indeed intend to rehire policemen and firefighters with the property tax income or if he was going to have to pay the tax and still watch his home insurance rates go up because of the lack of service personnel.

“I enjoy living in Neosho and I don’t mind the tax, but you’re selling me an idea that isn’t holding water,” he said, noting that city officials had promoted the tax as a way to keep insurance rates down.

Davidson said that no positions would be funded until at least Jan. 1, when the tax has actually been collected. After that, the city has to make “about 90 percent” of its debt service payments within the first seven months of the calendar year, Davidson noted.

“Until we see the cash flow summary to know if the current cash in the bank plus the revenues we expect can pay those bills, we don’t know how much of the 42-cent tax revenue is going to have to be used to supplement those debt payments versus how much can be directed in the short term to police and fire,” Davidson said.

Referencing a statement he had made at the end of last week’s property tax hearing about the new tax paying for itself by funding public safety services that would help keep insurance rates down, Davidson said he didn’t specifically know when that would actually happen.

“It may happen Jan. 1, it may happen March 1, it may happen Oct. 1 of next year,” he said. “As more revenue comes in we can put that revenue toward funding some things such as police and fire. But that won’t happen overnight. We’ve never said it would happen tomorrow or next week or next month. But in the long run that (property tax) revenue will give us a stream of money into this budget that will allow us to put jobs back in place. But it won’t happen until we have a better understanding of the cash flow needs of the city.”

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Read more on Tuesday night’s budget work session in Thursday’s Neosho Daily News.