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Maximizing Returns: Mount Carroll City Council Notes

By Mick Parsons For The Prairie Advocate News

MOUNT CARROLL– One more sign of the economic times could potentially impact the city’s banking. Gary Foltz, from THE National Bank in Mount Carroll, attended the Finance Committee meeting in order to explain why the bank has to lower the amount of interest the city can receive on the money in the accounts it has in the bank.

According to Foltz, because the Federal Reserve has dropped interest rates and appears to not be raising them anytime soon, the bank can no longer pledge securities for accounts in excess of $250,000. Armed with a diagram using an angry monkey and a bunch of bananas, Foltz explained that because interest rates have been so low for so long that the bank is running out of securities to pledge; moreover, he pointed out that if the bank were to go out and buy new securities, the bank would not be able to make back the investment it would have to make.

Foltz also said that FDIC insurance coverage is unlimited through 2012 for money in non-interest bearing accounts. “If rates don’t move up,” Foltz said, “in all likelihood they’ll extend it. But of course I can’t sit here and tell you the day that will happen.”

He recommended that the city can either put money in non-interest bearing accounts, or limit the amount in interest bearing accounts to $250,000. He added that if the city were to have the opportunity to move money into an account where it might see a decent rate of return and where the money is insured, that would certainly be an option; but he highlighted that the city’s relationship with the bank was one which was very important and “we want to help in anyway we can.”

“Are all banks in the same situation?” asked Alderman Mike Risko.

“It’s a problem across the country,” Foltz said. “And that is one of the reasons they’ve made FDIC unlimited.” He also said that as long as interest remains as low as they are that banks are going to be unable to promise securities the same way they have in past.

Mayor Carl Bates said that the other local banks are in the same situation; the other banks also recommended limiting interest bearing accounts to $250,000 or less.

Right now the city has a little over $400,000 in the banks, dedicated to various line items in the the city’s budget.

This most recent problem doesn’t directly impact the General Fund, however. And although the State of Illinois finally sent some of the money it owes Mount Carroll - income money owed from August 2011 - the city is still scrambling to make sure the General Fund stays solvent until the state gets around to paying its bills.

The Finance Committee also talked about the status of the process of collecting on old water bill debt. Bringing up one account in particular, Alderman Bob Sisler – who is not actually on the Finance Committee – said the city “shouldn’t be allowed to lien ‘em.”

The account in particular is actually now the responsibility of the executor of the former resident’s estate.

Alderman Doris Bork asked City Clerk Julie Cuckler if she knew the total amount due of outstanding water bills and then answered her own question when the copious amount of paperwork Clerk Cuckler provided didn’t answer the question.

“It’s $10,926.22,” she said.

Alderman Tom Charles, whose work on the Water Ordinance has led to the city making some headway in collecting unpaid water bills pointed out that it would take longer than a few months for the city to collect all that it’s owed. “It didn’t take six months to make the problem,” Charles said. “And it’ll take longer than six months to fix it.”

Clerk Cuckler pointed out that the new ordinance has been helpful. “It helps to have back up,” she said. “It helps like you wouldn’t believe.”

Alderman Bork asked whether the mayor has talked to Mr. Bennett, owner of the trailer park, where many of the city’s outstanding water bills come from – or so some members of the council would characterize. Mayor Bates said “He won’t talk to us. He’s livid.”

In other council news, the council voted to approve the ordinance granting a special use permit to Susan Rogers and changed the date of the December 25, 2012 city council meeting to December 26th.

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