Concerns about the city of Sunnyside's finances have caused the state treasurer's office to not grant a loan requested by the city.
State officials are worried about the drain on Sunnyside's general fund from losses in the jail account, which already has a $250,000 shortfall for the year.
Byron Olson is the city's chief financial officer and deputy city manager, and he says part of the issue is that the jail fund is part of the general fund, which covers day-to-day expenses.
"Any revenue shortfall becomes a problem for the general fund," he said.
The city had sought a $450,000 loan to lease four new police cars and one new street sweeper.
Wendy Kancianich of the lease purchase program in the State Treasurer's office said her agency's approach is not so much a denial as a wait and see.
"We're still working with them, making sure they are okay," Kancianich says of Sunnyside. "It sounds like they still have some outstanding budget issues and we want to see what their plan is."
She confirmed the state has taken a wait and see approach with cities other than Sunnyside, encouraging them to re-apply later this year or next when other state leasing opportunities arise.
Olson said there's no guarantee Sunnyside will be approved.
As a result, he says the city has to consider other options for paying for the new vehicles. The four police cars have already arrived, Olson said, and the contractor has begun work on preparing the street sweeper.
The options include an interfund loan, borrowing money from the water or sewer accounts, or a bank loan.
As for shoring up the jail fund, Olson said the city may consider targeting additional customers for housing prisoners, such as the city of Yakima and Kittitas County.
The city had relied on income from the U.S. Marshal's office, housing prisoners for up to six months or even a year at a time. Due to budget cutbacks at the national level, the city is receiving considerably less business from federal law enforcement.
Olson said the jail budget review will also include identifying the number of Sunnyside inmates versus those being held for other government agencies.
"We certainly don't want to be in the position of subsidizing other entities that are housing inmates with us," he said.
Leases for the new police cars are part of an $850,000 budget amendment council passed on April 25.
The amendment, which also included three new hires for the police department, was approved despite warnings from Olson and City Manager Mark Gervasi the city didn't have the funds beyond 2012 to sustain the added expense.
Theresa Hancock was the only one on the city council who opposed the budget amendment.
"We got ahead of ourselves, spent beyond our means not knowing what the financial picture would be," Hancock said. "States and counties everywhere are cutting back and we were adding at an accelerated pace. It really makes me concerned."
Mayor Jim Restucci says the state's decision wasn't a surprise.
"This isn't that big of a deal," Restucci said. "With the current fiscal situation the state is in this is expected."
He added, "They're using Sunnyside as an example, they're making it harder to borrow money from the state."
Restucci said an interfund loan will probably be the direction council takes to pay for the five vehicles.
He says the situation is part of the learning process in the city's move to a two-year budget.
"We realized the biennial budget would have growing pains," Restucci said. "We'll be able to iron some things out."
The agenda for the council meeting on Sept. 12 is set, so Restucci said it will likely be Sept. 26 when council reviews the loan situation, as well as how to pay for the $850,000 budget amendment approved in April.
"The state needs council to make a decision to move forward about funding for the additional police officers," Restucci said. "The state's a little bit reluctant, and that's understandable."