John Coffelt, Editor

On the one hand Manchester City has very good credit, but on the other, without a large new revenue stream, the city will not be able to borrow money to accomplish any major projects.

Cumberland Securities Company Vice President Scott Gibson said the city has strong AA credit, based on a strong budgetary performance, strong reserves and manageable debt burden.

However that debt, issued in the form of bonds has maxed out the city’s renewable revenue. Gibson told the Board of Mayor and Aldermen at its Feb. 7 work session that the city has a balanced budget.

Balanced means little to no net gain.

To borrow more money the city would need to provide annual bond payments of $75,000 per million the city would borrow. A $10 million project would need $750,000 a year in new funds.

The city’s current debts will be consistent until 2038. Growth in the city produces more revenue, but it offset by added expenses.

A new revenue source is needed for the city to borrow money. That could be introducing a new fee or a tax increase.   

The 2023 debt service payment is $1.4 million for the year.

The city has bonds primarily issued to primarily cover the building of the Rec. Complex and an expansion at Manchester City Schools. The $17.705 million the city borrowed will be paid off in 2038 and 2044. 

Sewer money available

While the city’s loans will not be paid off this decade, bonds borrowed by the city on behalf and repaid by the Water and Sewer Department will drop significantly in 2029. As those annual payments go from about $1.6 million to roughly $800.000 starting in 2029, Water and Sewer could potentially borrow money for projects without a rate increase to cover bond.

‘Don’t squander the fund balance’

Gibson stressed to the board the importance of maintaining a strong fund balance. He said that cities’ reserves are as a whole in the best shape ever due to COVID-19 relief money helping out with projects that would otherwise drain those reserves.

“I can’t emphasize enough that you all maintain your fund balance,” he said.

Gibson said one-time expenses were a reasonable use, but cautioned using fund balances for reoccurring expenses that will be in every future budget.

“This city been working for 10-plus years…across multiple boards and administrations…to build that fund balance. You are the beneficiary of having that strong fund balance,” he said.

A strong fund balance allows low interest rates on loans, allows for soother cash flow for expenses and is there for emergencies.

“You don’t want to use money coming in once for something that’s going to be ongoing,” Gibson said.

John has been with the Manchester Times since May 2011. John has won Tennessee Press Association awards for Best News Photo and placed in numerous other categories. John is a 1994 graduate of Tullahoma High School, a graduate of Motlow State Community College and earned a Bachelor of Arts in English from Middle Tennessee State University. He lives in Tullahoma, enjoys painting, dancing and exploring the outdoors.