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222 <br /> THURSDAY, JANUARY 21, 1999 <br /> <br /> that many communities his firm has studied and worked with could not support such debt without tax <br /> <br /> increases, and that the analysis dearly indicated that Martinsville is not only in a strong financial and debt <br /> position currently, but that the City would remain extremely competitive even if it assumed the level of debt <br /> proposed to meet its needs. Mr. Rose then stated that the role of his firm was to provide the information and <br /> tangible tools Martinsville needed to do the things the community needed to do. Vice-Mayor Teague then <br /> noted that the figures on the Debt Ratio graph did not reflect Meals Tax funds within self support figures. <br /> Mr. Rose stated that since this is a dedicated revenue item it is not pledged as part of the full faith and credit <br /> of the City, versus the Real Estate property tax, which is part of the full faith and credit pledge. Mr. Rose <br /> went on to show the City' s very low debt, its relatively low fund balance, and the fact that some expenditure <br /> areas were higher than average. Vice-Mayor Teague pointed out the comparatively low fund balance figure <br /> as a potential problem. Mr. Reynolds responded that the comparison information illustrated the fact that <br /> some communities chose to finance projects through debt and were able to retain monies to ereate fund <br /> balances, as opposed to expending cash reserves to pay for projects, thus showing low fund balances and <br /> commensurately low debt obligation, in a pay-as-you-go manner. Mr. Reynolds stated that Martinsville had <br /> typically used in-house funds for projects in the past, resulting in both a low debt ratio and a low fund balance. <br /> Mr. Rose added that as a city Martinsville had been able to accomplish more with limited resources than <br /> virtually any other jurisdiction of its size in the comparison group, and stated that the bond rating agencies <br /> would see tax levels that were competitive now and would remain so, while the City was fully able to do key <br /> projects through debt financing. In addition, Mr. Rose noted that the potential for interest earnings on cash <br /> held in reserve can also contribute to the advantage of capital debt financing. <br /> <br /> Further discussion then occurred regarding representations of the City' s General Fund health and fund <br /> balances, funds held in escrow for landfill closure and post-closure, tax exempt finance rates, and arbitrage <br /> earnings potential. Council Member Roop pointed out that it was likely that some of the other localities in the <br /> comparison analysis had funded projects using local-reserves, not debt financing, and still had strong fund <br /> balances. <br /> <br /> <br />