Borrowing $25 million in bonds backed by gas tax money could boost Lincoln’s street repair funds and help restore proposed budget cuts to sidewalk improvement and library service, city officials said Friday.
Mayor Leirion Gaylor Baird and several Lincoln City Council members propose taking advantage of low interest rates to issue bonds backed by the highway allocation funding the city receives from state gas tax collections.
Lincoln is facing a $12 million shortfall in its upcoming budget, and Gaylor Baird proposed budget cuts across city departments as the main way to close that gap.
But this proposed bond issue, in addition to boosting the available dollars to fix city streets, would effectively help the city avoid about $1.3 million in cuts to quality of life projects.
The money would allow the mayor to use the general funds that currently proposed to be allocated to Lincoln Transportation and Utilities and instead restore $500,000 in sidewalk repairs, $400,000 in library hours, $220,000 in park playground costs, road and parking lot repairs and $88,000 in downtown improvements among other proposed cuts.
Under the proposal, the city would receive at least $5 million in the first year with the hopes of taking in the bulk of the bonded funds in the early years to fund projects and mitigate the effects of construction cost inflation in later years, according to a city memo.
The funds would infuse the local economy with good-paying construction jobs that can be done safely amid the coronavirus pandemic, and despite the ongoing construction of the South Beltway, the city believes enough contractors are available to carry out the work, the memo said.
Projects would be spread across all quadrants of the city.
These funds are separate from the new quarter-cent sales tax for street repairs, and the bond proposal would leave that funding source unaffected, the mayor said.
Gas tax money given to the city annually will pay off bonds issued in 2004 and 2006 in the next couple of years.
City finance officials believe the funding source is dependable and makes the bond issue attractive to lenders, noting in the memo that Lincoln’s gas tax allocation has climbed from $15 million in 2010 to $27 million last year.
By the end of June, 10 months of gas tax money given to the city totaled over $23.3 million, according to a memo on the proposal.
Lincoln City Council members would need to authorize the city to issue these bonds.
“This solution would not be possible without the support of our City Council,” Gaylor Baird said.
Council members Bennie Shobe, Jane Raybould, James Michael Bowers, Richard Meginnis and Sändra Washington joined the mayor at a news conference announcing the proposal.
Raybould said the city could receive interest rates on the bond as low as 1.5%, which make this financing measure a fiscally smart way to get more roadwork done now at a lower cost when construction inflation rises 5% annually.
“Waiting only makes projects more expensive,” Raybould said.
This is a developing story. Stay with Journalstar.com for updates.
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