City Council owes $190M
Revenue shortfall will mean delays in capital works
By Samantha Alleyne
September 30, 2002
The Mayor & City Council owes creditors some $190M and is so strapped for cash that it will be unable to complete projects outlined in its 2002 budget.
Deputy Mayor Robert Williams, who is also Chairman of the Council’s Finance Committee spoke to Stabroek News last week about the financial difficulties facing the city council.
Williams recalled that the council had approved a yearly revenue estimate of $1.6 billion and a projected budget expenditure of a similar amount.
The budget has several components, which include administration, maintenance, security and general works.
“Council on the basis of the revenues it has been receiving has been executing some of these works during the year. However, we have not been receiving a commensurate amount of money to match the pace at which we were spending…” the deputy mayor said.
“And as it comes to the last quarter of the year we find that our revenue outstanding (uncollected) is much more than we had anticipated and as a consequence we are unable to execute the programmes that are remaining to be done. While at the same time we have outstanding to some of our creditors sums of money for which credit was obtained on the basis that revenue as it comes in would have been able to satisfy those credits.”
Williams said the key areas of revenue shortfall stem from public entities inclusive of some state buildings, which owe the council around $450M of which the council has only received about $150M.
Williams feels that if these funds were received the council would be able to continue with the programmes as planned.
Rates are also outstanding from private business, some of which, Williams said, have suffered tremendous economic difficulties because of the state of the economy.
“We have taken a number of property owners to court under the petty debt act and have gotten judgement in a number of cases. But what is there to levy on? And what is there to recover?” Williams said the amounts that could be accrued would not be enough to enable the council to proceed with the work.
But he said the council is still proceeding with the legal action if only to have on record the judgements against these property owners. He said the council has also been encouraging the property owners, who are facing financial difficulties, to sit with the council’s representatives to find a way for the outstanding taxes to be liquidated while allowing the owners to make those payments in a structured way. This, he said is an ongoing exercise and on a weekly basis they meet with such owners.
Williams said the council had had meetings with President Bharrat Jagdeo and with the Minister of Finance, Saisnarine Kowlessar in an attempt to get the money owed to the council by the government entities. This has resulted in the council receiving $50 million towards outstanding amounts.
The council is about to send a letter to the President and the Minister explaining the state of its finances and imploring them to make another payment to enable them to carry on with the capital works that are in progress.
He added: “One of the things that will not suffer is the fact that those employment costs have to be met. While the roads are unable to cry for their money the staff will cry to make sure they get their money on time and the amounts that are budgeted.”
As a result the areas that are suffering are road repairs already planned and repairs to buildings and other facilities. Some of the road repairs set back are in Tucville, North and West Ruimveldt and Agricola. Some capital works planned for City Hall including the administrative complex, which needs to be expanded, are also on hold.
About two years ago the council had faced a similar cash crunch and Williams said at that time it had received a payment from the government. But the government was not happy with the way the council was spending its money.
Williams said since then there has been tremendous progress.
“The financial management aspect is pretty up to date now, and is in the hands of our auditors, so that has satisfied one of their concerns in terms of how we are managing the funds we are given.”
During that time, Williams said some of their creditors and some workers to whom money was owed were forced to take action against the council.
“But now the situation is being actively dealt with to avoid such circumstances,” the deputy said.
But Williams said he could not guarantee this not happening again. “We can promise citizens no assurances because a budget is based on anticipated revenue collection; and so long as the economy is in such a difficult position one has
to anticipate that there will be difficulties in payment of monies outstanding.
Taxes are no different from other outstanding amounts that people have to pay.”
Meanwhile, the council has adjusted its expenditure and hopes it will meet its revenue collection target over the next two months of $110M.
A substantial amount will go towards employment costs and statutory payments to the Guyana Power & Light (GPL) and the Guyana Telegraph & Telephone (GT&T).
Williams said if it reaches a point where salaries cannot be paid then they would have to “seriously address the problem from more than one angle.”