Fiaschetti said some changes in federal law could have unintended negative effects on banking and the municipal bond market by discouraging banks from purchasing municipal bonds. That could reduce the marketability of municipal bonds, he said.
"The city needs continued use of and access to the municipal debt markets to provide the necessary financing to support our current and long-range plans," Fiaschetti said.
Fiaschetti was able to save
"If we don't have access to those (municipal bond) markets, those types of opportunities will be harder to get," Fiaschetti said.
But Fiaschetti said the city will not accept the federal proposals without a fight. He has met with banking officials, and contacted N.C. and federal legislators, including several federal agencies to voice his concerns, he said.
While talking with banking officials, Fiaschetti said, it was suggested to him that the city should borrow any funds it needs soon instead of waiting until spring.
Although parts of the federal proposals don't go into effect until next year, Fiaschetti said banks lending long-term are already thinking about next year.
"Our new strategy will be to line money up first and spend it later, as opposed to spending now and borrowing later. We have to have a shift in our capital financing strategy for the city," he said. "We are fighting back."
Another federal proposal is to tax municipal bonds as part of the federal tax overhaul proposal to lower the federal deficit, Fiaschetti said.
Cities and counties rely on tax exempt municipal bonds to keep taxes and fees down, he said.
"Municipal bonds are a catchall for state, county and local municipalities across the country," Fiaschetti said.
If the bonds are taxed, it could mean increased taxes, utility bills and services for customers, he said.
Unemployment rates are also challenging cities' finances, Fiaschetti said.
The high unemployment rate affects not only the individual but the wider community.
Fiaschetti said the unemployment rate was the highest profile barometer of the economy.
"If people are working they have more money to spend and that brings in additional sales taxes," he said.
A highlight in the mid-year financial review was the state's municipal
"The council felt our overall good financial condition warranted an increase," he said. "Their view of
That allows the city to issue municipal bonds at lower interest rates, saving money for the taxpayers and ratepayers, he said.
Short-term fiscal challenges for the city include transferring funds to support the general fund, Fiaschetti said.
Transferring water and sewer funds to support the general fund is not a good business practice, he said.
"All funds, including the general fund should be self-sustaining," he said.
The general fund could see a shortfall of
Preliminary results of the holiday spending season were soft and
"We have to plan and adjust our spending according to these reports," he said.
The total general fund challenge for the upcoming budget is a
The city's action plan should be to make the
"In the 2015 budget, we will have to look hard at the general fund and wean ourselves off of transfer support from water and sewer rates," Fiaschetti said.
If the city doesn't it will definitely mean higher rates for customers, he said.
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