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Macera’s money order put on hold

01:00 AM EST on Tuesday, November 21, 2006

By Mark Reynolds

Journal Staff Writer

JOHNSTON — Mayor William R. Macera will not have leeway to borrow money temporarily and use the cash to pay bills.

The council has decided to delay action on Macera’s borrowing request until a new administration takes office in January.

His request for permission to borrow as much as $7 million with tax anticipation notes, if necessary — and then quickly repay the money following a fresh influx of tax revenue — puzzled several members of the council.

It drew a bristling attack from Councilman Ernest F. Pitochelli, the newly reelected District 2 representative.

“I’m not going to vote to give him more money, because he’ll spend more money,” Pitochelli told the town’s finance director, Richard F. Connors, during a recent meeting.

“Well, I disagree with that,” Connors said.

“I know you do,” Pitochelli said.

Yesterday, Macera said he is not aware of any issue that would affect the town’s ability to pay its bills in the short-term, although he and other officials are trying to size up a new deficit caused by unplanned expenses in the town’s self-insured health-care program last year.

“This was just a cushion in case we have any kind of problem,” Macera said.

“Those statements mean nothing to me,” he said, referring to Pitochelli’s critical comments. “I’ve been here for eight years and I’ve been accountable to the public for eight years.”

Both Councilwoman Stephanie P. Manzi and Councilman John DiMaio were curious about the timing of the request.

For example, the council authorized up to $7 million in short-term borrowing last spring, as the town neared the end of the fiscal year, and Connors worried about a potential cash-flow problem.

To them, the timing of that request had made sense: Connors was saying that the gradual outflow of millions of dollars to pay school expenses, all of it unbudgeted, might crimp finances enough to cause a cash flow problem late in the year.

In what has become a regular pattern, the town typically pays off unbudgeted education expenses in one fiscal year by digging into the first wave of tax revenues during the next fiscal year. This offsets revenue to support that year’s budget, creating another deficit to be carried over to the next fiscal year.

Meanwhile, it can create cash-flow problems late in the fiscal year, which ends June 30.

Last year, Connors sought authority for tax anticipation notes and later reported that he had been able to pay the bills without them.

But this time around, he asked for permission much earlier, telling the council that the ordinance for the notes was a copy of the one they had approved last March. The need for it hadn’t changed, he said.

“A quarter earlier than last year?” asked DiMaio.

“Well, I’m a quarter earlier this time,” Connors said describing it as a cautionary measure.

“It’s simply a safety valve, a parachute,” he said.

“A parachute for who?” Pitochelli asked. “The town? Or the mayor?”