CHICAGO - The financial oversight authority for the city of East St. Louis, Ill., on Saturday approved the city's $25.4 million all-funds fiscal 1994 budget after forcing city officials to revise the spending plan three times.
The East St. Louis Financial Advisory Authority rejected the budget three times since Nov. 6 because members said there was not enough information about a city debt restructuring plan and Projected revenues and expenditures for fiscal 1994. The city's fiscal year begins Jan. 1.
R. Bruce Patterson, executive director of the authority, said authority officials were satisfied with the city's explanation of why a debt service allocation for the proposed restructuring was not included in the budget.
City officials on Saturday informed the authority that they intend to proceed with debt restructuring in 1994. They said they will propose a budget amendment in the first quarter that would reallocate some of the $4.2 million currently spent on paying the city's debts. Some of that money could be used to pay for debt service associated with the issuance of bonds under a restructuring plan, Patterson said.
East St. Louis is working on a plan that would restructure $79 million of debt, including $25.5 million of outstanding unrated bonds. The plan, which would need authority approval, is expected to include the sale of about $30 million of bonds by a state of Illinois conduit issuer.
The authority also has hired an independent consultant to study a city debt restructuring. The consultant is scheduled to complete its proposal in the next two months, according to Earl Lazerson, the authority's chairman. He said the consultant's plan would include a proposed timetable for the issuance of bonds.
Patterson said it was too early to tell if the final restructuring plan would be a combination of both the city's and the authority's versions.
The authority agreed on a compromise allocation for unforeseen bills in fiscal 1994. Though the authority originally had requested that $1 million be set aside for that purpose, it agreed to a $400,000 allocation in exchange for the city's promise to pay about $1.6 million of earlier bills before the end of fiscal 1993.
The budget also includes a property tax abatement of about $1.1 million for city residents due to projected healthy revenues from a riverboat casino that opened in May, Patterson said.
In addition, the budget sets aside $150,000 for hiring police personnel and $280,000 for the financing of new fire trucks, Patterson said.
Meanwhile, East St. Louis interim city manager Ishaq Shafiq, who is currently chairman of the city's debt restructuring team, may be replaced. The Belleville News-Democrat reported last week that he hid past convictions for arson and aggravated assault from city officials.
The news broke shortly before the City Council was to vote on the permanent appointment of Shafiq, who had been Mayor Gordon Bush's choice for the job.
An authority official said that city officials now intend to conduct a national search for a new city manager because of the revelations.
Shafiq and Bush did not return phone calls.
Authority officials had no comment on the controversy surrounding the city manager.
