To loan or not to loan

If we go by the statements of Cebu City officials, the city is swimming in funds and yet we need to secure a half-a-billion peso loan  to meet this year’s Supplemental Budget No. 2.

The Cebu City Treasurer’s Office said it needs to obtain a P674-million loan to cover half of the projected P1.2 billion budget for this year of which a sizable chunk will go to pay  delayed salaries of City Hall employees.

The loan became yet another tit-for-tat between Mayor Michael Rama and the  Cebu City Council, which  claimed that any surplus funds the city had was already gone.

The argument was tempered by Councilor Margot Osmeña’s statement that they won’t be obstructionists as far as the supplemental budget is concerned. We have to ask whether the surplus funds they referred to were bank deposits or other funds the city had yet to know of.

If these were  bank funds, then the city obviously has to spend part of it for beneficial projects. Osmeña is merely stating the obvious, which is the city government can’t afford not to approve the P1.2-billion if they don’t want to see employees quitting their jobs over delayed salaries.

Yet Vice Mayor Joy Augustus Young had a point in questioning whether the supplemental budget was overblown due to  bloated revenue targets set by former Cebu City Treasurer Ofelia Oliva  for certain departments that earned well below their original projections.

Among them are the Cebu City Traffic Operations Management, whose employees have yet to get their salaries after the agency failed to receive their subsidy from City Hall.

We understand that P2 billion worth of funds  in government funds were placed on time deposit for five years maturity. Whether the city gets to use such funds for long-delayed projects like the drainage master plan, only City Hall’s powers that be can answer.

City officials said they will look into every nook and cranny of the city budget to see whether they were unspent funds that could be used to cover the supplemental budget but everyone, including Rama, would have to see that contracting another loan isn’t the way to go considering that the city still has outstanding loans to settle.

The biggest loan was used to develop the 300-hectare reclamation project that is now known as the South Road Properties (SRP), who payments will extend to the next generation. Amortization payments are allocated in the budget but this early, Rama wants to sell SRP lots  to pay for projects like the city drainage master plan which, even if completed in 2006, needs to be updated in light of increased rainfall due to global warming.

Taxpayers need to be convinced that another loan  and all this fund juggling for   ambitious projects are not compromising the city’s finances.