The Monterey Board of Mayor and Aldermen authorized a $500,000 capital outlay note to complete several ongoing grant projects.
Mayor Alex Garcia said the interest-bearing general obligation note is intended to bridge the gap between project expenses and the arrival of state reimbursements. Garcia said the town does not intend to carry the debt long-term, as the note will be repaid as grant funds are received.
“The object is to finish off the grants that we had and pay them with the reimbursements,” Garcia said. “There is no prepayment penalty.”
The board discussed the importance of ensuring the reimbursements are applied directly to the note to avoid accumulating permanent debt. The motion passed 7-1, with alderman Jamie Phillips casting the dissenting vote.
Phillips said the town must be disciplined in its repayment strategy over the next three years.
“Since we don’t pay those when they come in, in three years we’re going to have half a million dollars note that comes due,” Phillips said.
The capital outlay note serves as a short-term financing tool common for municipalities that must pay contractors for grant-funded work before being reimbursed by the state or federal government. Garcia said the move ensures the town can finalize its current obligations without depleting its immediate cash reserves.
The board also approved a change in the tax rate from $1.39 to $0.8028 to reflect the increase in property values following a recent reappraisal. Garcia said he was told the new tax rate would be the same as the old one, following the reappraisal.
Phillips said he was still concerned about the city operating outside of their proposed budget.
“If you look at this form, I know I preach this every month, every meeting, we went over budget by $300,000, guys,” Phillips said. “We can’t afford to keep doing that. We can’t, we’ve got to control it. That’s all I’ve got.”
