Taxes to pay for V&T bonds falling short
Sales tax revenues dedicated to paying off bonds for the V&T Railway are expected to fall short by $300,000 this fiscal year.
But Carson City Finance Director Nick Providenti said it’s not this year’s bond payments he is concerned about. The Carson City Convention & Visitor’s Bureau has agreed to put up $100,000 and the V&T commission has about $200,000 in cash built up during the years when sales tax revenues came in higher than needed.
He said the real concern is how to make next year’s payments if the economy doesn’t improve.
The Carson Supervisors approved the sales tax four years ago to raise $15 million in bond money to get construction of the railroad started. It takes $1.1 million a year to make the bond payments.
He said if revenues fall short next year as well, the Convention & Visitor’s Bureau’s $100,000 would still be there, but the $200,000 in the V&T commission’s bank account would be gone.
“The city would be on the hook,” Providenti said. “The General Fund is obligated to pay it because it’s a general obligation debt.”
He said there is no choice no matter what happens with the rest of the city’s budget because defaulting on the bonds would trash Carson City’s bond rating, making it impossible to borrow in the future.
“We’d definitely pay the bonds and figure out what to do with the rest of the money we have,” he said. “Defaulting is not an option.”
However, Providenti said, he expects the economy to improve over the coming year, hopefully reducing the shortfall to a more manageable level.
CCCVB Board Chairman Dwight Millard has sent a letter to the V&T Commission asking for the $200,000 back.
“It is now apparent that the bureau will need these funds to assist and insure that Carson City makes the bond payments due on the bond funds that were used in constructing the existing infrastructure,” he said in a letter to the V&T commission.
“We’re asking that it be returned directly back to Carson City,” said Millard, who also chairs the V&T commission.
The issue was on the commission agenda for Monday but that meeting was canceled because of the storm. A new meeting has not yet been scheduled.