City claims they have plenty of money

Copyright © 2009
Gallup Independent
By Bill Donovan
Independent correspondent

GALLUP — Two years ago, Mayor Henry Mendoza was crying poverty, saying the former administration left him with no money to make needed capital improvements because they bonded the city to the hilt.

Now, things have changed.

The city’s bond company is planning to come to the City Council meeting on June 23 to talk about issuing $12.5 million in bonds to raise money for improvements to Red Rock Park, Harold Runnels Pool, the Fitness Center and an elevator in the building that houses the children’s library and the city utilities department.

But even when this was approved, city officials say they still have many more millions to play around with — enough that would even fund the mayor’s dream of an indoor arena, although that is still on the back burner.

City Manager Gerald Herrera said the city is looking at using money that is coming in from the quarter-cent gross receipts tax increase approved last year.

That tax brings in between $1.3 million and $1.8 million a year, and committing just $1 million of that would provide the city the ability to issue $12.5 million in bonds.

These would be revenue bonds, which means that the city would commit certain revenues over the next 15 years or so to pay these bonds back. The Mendoza administration also finds itself with the ability to issue general obligation bonds as well, if they can get voter approval.

During the Rosebrough administration, voters approved a variety of projects — including the building of the aquatic center and the downtown mural project — and basically obligated the city to the maximum allowed under state law.

Three or four years have now passed and enough has been paid off that the city government could go to the voters and ask for approval to issue up to $8 million more in bonds without increasing the local tax base.

There have been no plans to do that, but Herrera said the bonding capacity does give the city government some breathing room in case funds have to be found to meet emergency needs.

So, even when the council approves the $12.5 million bond issue, the city still would have $15 million or more in bonding capacity to use for an emergency.