In addition, to give the city some breathing room in advance of the second half real estate taxes, Mattson suggested the city take out a Tax Anticipation Loan to cover its day-to-day operations, for the next three months. The loan would be an advance of sorts for the second half real estate taxes which are due in December. The loan would then be repaid when the second half taxes are received.

Due to the immediate need for the tax anticipation loan, the council asked Mattson to first work with Mark Olson of First National Bank who was also at the meeting. By first attempting to do the loan locally, Mattson said the process can be sped up and could be done as soon as a few weeks. He said the council should be thankful they have a banker who is willing to work with the city on the matter, because in some circumstances this always isn’t the case.

General Fund, Water and Sewer Funds

Looking towards the 2009 preliminary levy and budget, Mattson told the council steps need to be taken to not only build up the general fund, but the water and sewer funds as well. According to Mattson the water and sewer funds should each have a minimum of $250,000- $300,000. Money from those funds are typically used to make repairs and fix breaks and make repairs around town.
While the rates should bring the funds back up to a reasonable level, he said that could take quite some time and the city should look at levying the money to more quickly bring the funds up to Mattson’s suggested minimum level. 
As of Tuesday’s meeting the water fund had $75,000 in CD’s put away, and the sewer fund had $11,000 in CD’s saved.
The general fund on the other hand held a negative balance of over $161,000 as of July 27.
According to Mattson the general fund should contain a minimum of five months of operating money as a backdrop or cushion. He said, even though it may be a difficult decision given the current situation, the city should levy more money over the next two years or so to help build up the general fund, as well as the sewer and water funds.
"You should be levying to build up some kind of war chest," he said. "I know it can be painful, but it has to get done."

What next

Despite the sobering news, Mattson said there is a light at the end of the tunnel.
"Here’s the thing, you’ve got all the bad news now you just have to figure out what you are going to do," he said.
He suggested the city should meet with the city accountants and auditors to figure out the best way to get the city out of its current financial situation. Unlike the past few years when the city has kept tax increases minimal by raising the levy at or near 2.5 percent, Mattson said the city should be prepared to levy a major amount this year to build up its funds and work its way out of debt.
What makes the news even more complicated is the time crunch currently facing the city. A preliminary levy amount is due to the county no later than Sept. 15.
In the short term the city will be looking into a Tax Anticipation Loan and a bond for the December 1 and 15 bond payments to be paid over the next five years.
To help generate money as quickly as possible, the city discussed checking water meters to get people caught up on water bills. It was estimated at the meeting approximately 50 percent of people don’t read their water meters and could be behind on their bills. City workers would go door-to-door to check the meters and have people back pay their bill. The thought was to start checking water meters by the end of the month.