LA PALMA : City Can Meet Debts Despite Fund Freeze

City Manager Pamela Gibson had some bad news this week for the City Council, but followed it with some good news.

The bad news is that all $2.6 million of the city’s capital projects fund is frozen in the troubled county investment pool, and $658,000 in debts will need to be paid by June.

The good news, she said Tuesday, is that the city has enough money in another account to meet the debts.

“It’s complicated, but we can do it,” Gibson said after the meeting.

Gibson said the city would borrow the money from its affordable-housing fund.

The city also has $2.9 million of its reserves with the county, which filed for bankruptcy earlier this month, freezing all investments.

Gibson said that even though the money is tied up in the county, the city should not have problems meeting day-to-day expenses.

“At this time, it appears that the city of La Palma will be able to get through this crisis without irreparable harm,” Gibson said. “The city will continue to offer the high level of service that the citizens have come to expect.”

She suggested holding off on new purchases until the city knows how much money it will get from property taxes. The first casualty of that policy was the purchase of a $20,000 street sweeper.

But Gibson did not suggest delaying projects that had already been approved.

The council will go ahead with the purchase of four police vehicles for $69,000.

Mayor Wally D. Linn said the city is in a better position than many others that lost millions when they borrowed money to invest in the county’s investment pool.