The Takoma Park City Council last week authorized officials to seek a $400,000 loan to get the city through a fiscal dry spell.
Saying that money for the payroll and city services is nearly exhausted, city administrators asked the council to approve a short-term loan that would cover operating expenses until money is collected from other sources later this year.
Several citizens spoke against what one called "the dangerous practice of deficit financing," but council members said they had little choice.
Property taxes, the city's main source of funds, will not be collected until fall. In the meantime, the only operating money will come "sporadically" from Montgomery County tax rebates to Takoma Park, City Administrator Alvin Nichols told the council. That would not be enough to sustain municipal services through spring, he said. "We are in a cash-flow shortage," he added.
In the past, surpluses from previous years have carried the city through the annual spring funding drought, Nichols said. But inflated operating costs have outstripped modest increases in revenue, chipping away at that surplus. The city's operating budget is $3.3 million this year.
Last year, the council borrowed $400,000 at 9 percent interest to bankroll the city from March to September, the first time such an action was needed, Nichols said.
Nichols told the council that income projections have been complicated by city residents who are holding back property tax payments because the current two-thirds of 1 percent the city charges in interest on overdue accounts is far lower than the interest residents can earn by investing the money. State law prevents the council from creating a late penalty, which would be charged in addition to interest on overdue accounts, until July 1983.
In addition, income from the corporate property tax the city approved two years ago, he said, is being held up while state tax assessors continue sorting out which businesses will come under the local law and how much they will owe the city.
The council decided last week to change city accounting from books to computers, which officials said will enable them to spot instantly the kind of revenue and spending trends that resulted in last year's $180,000 budget deficit. That deficit also was attributed to problems in collecting tax revenues.
City officials are hoping for passage of a bill being considered in the General Assembly that would require counties to formulate fair tax rebates for town services that the counties don't provide. Although both Montgomery and Prince George's counties give some rebates from county property taxes, Takoma Park officials said the amount received is $2.5 million short of what the city spends for local police, a library, a public works department and other services.
Angered that Montgomery County officials had failed to send a representative to discuss changed plans in a detoxification center for alcoholics proposed for Takoma Park, the council voted unanimously to ask owners of the house not to sell it to the county until the county discusses its plans with city officials.
The council also appointed two citizens to fill vacancies on the city landlord-tenant commission. Dyan Loya will serve as a landlord member and Alan Freeman will be a citizen representative on the commission, which mediates rental disputes.
The city also received a $5,000 state grant for technical assistance on a project to revitalize the downtown business district.
Responding to recent complaints that city police have been harassing citizens with tickets for leaving cars parked on the street for more than three days, Nichols said a city officer had been "disciplined" for becoming "overzealous."
"This is obviously an ordinance that needs to be enforced with a lot of discretion," Nichols said, explaining that the ordinance is meant to be enforced only when there are complaints about abandoned cars.
In 1972, city police admitted they were overzealous when they ticketed, and then ordered towed away, a resident's prize 1951 DeSoto parked at a repair shop. The car's owner reported it stolen just hours after he parked it, only to learn the classic auto had been shredded into scrap steel with the city's approval.