CHICAGO -- The financial watchdog for East St. Louis, Ill., on Saturday approved a $6.4 million fiscal 1992 budget for the impoverished city.
Ratification of the budget for the fiscal year that begins Jan. 1 by the East St. Louis Financial Advisory Authority moved the city one step closer to complying with a financial restructuring program that eventually could lead to a $30 million bond-financed bailout, according to authority Executive Director John Tegley.
He added that in approving the budget, the authority required East St. Louis to file quarterly reports in the coming year to show that its expenditures are in line with its revenue estimates.
"If their revenues are falling short, they will have t curtail their expenditures," Mr. Begley said.
The authority was created last year after the Illinois General Assembly passed the Financially Distressed Cities Act. That law set up a general framework for rescuing troubled cities, but it was drafted specifically with East St. Louis in mind.
At that time, East St. Louis had reached the point that there was no money to fix broken polife and fire vehicles or pay for garbage collection.
Now that the budget has been approved, East St. Louis and authority officials will speed up work on a a long-range financial plan for the city, Mr. Begley said.
The financial plan is the second step that needs to be completed before the financial advisory authority will request that the Illinois Development Finance Authority issue $30 million of bonds and lend the proceeds to East St. Louis to assist in paying off its long-term debt, as authorized by the distressed cities act.
Issuance of the bonds also would require the approval of Illinois Gov. Jim Edgar because they would carry the state's moral obligation pledge.
The city would be responsible for paying debt service on the bonds. In case the debt service payments were not made, the financial advisory authority would have the power to intercept the city's annual $3 million of state income and sales tax revenues.
East St. Louis' long-term outstanding debt is estimated to be about $50 million. Mr. Begley said attempts will be made to renegotiate much of the debt after the long-term financial plan is complete.
He added that there is no timetable for completing the financial plan.
East St. Louis had submitted its proposed budget to the financial advisory authority on Nov. 1. Mr. Begley said final approval of the fiscal 1992 budget marked the first time in years the city had a budget in place before a new fiscal year started.