JEREMY DUDA - Daily Herald | Posted: Tuesday, June 5, 2007 11:00 pm
The Provo Municipal Council voted to add $1.2 million in sales tax revenue to the city's budget for the fiscal year 2008 to help iProvo pay off its debt.
The resolution passed 5-1, with Councilman Steve Turley casting the lone dissenting vote. The council will hold another public hearing on the fiscal year 2008 budget on June 19.
The city's most recent projections show that iProvo will not be self-sustaining until at least 2011, and Municipal Council Chairman George Stewart said that using sales tax revenue to pay off the network's debt is the fiscally responsible thing to do.
"That debt must be repaid. You don't default on bonds," he said.
Provo approved a $39.5 million bond in early 2004, and with interest, Stewart said it could ultimately cost the city as much as $64 million in debt. According to the city's budget projections, expenditures for iProvo will exceed total revenues by $1.19 million in the fiscal year 2008, which begins in July.
In the fiscal year 2009, that number is projected to be about $1.8 million, and $1.3 million in 2010.
Councilwoman Midge Johnson expressed skepticism about the plan, saying the city should instead put money into a restricted fund that could be used in the future if iProvo cannot meet its debt service.
"I kind of think it would be more prudent to kind of save it there," she said.
Stewart disagreed, saying the city had no way of knowing what sales tax revenues would look like in six months or a year, and Provo should work to pay off the debt service now while it had the opportunity.
A Provo resident told the council that he has had some recent problems with his iProvo services. Mayor Lewis Billings said the network has had problems and has room to improve, but was optimistic about iProvo's future.
The network has 10,000 customers, Billings said, and numerous service providers are talking to the city about offering services with iProvo. It is gaining momentum, he said, and those potential opportunities will further increase iProvo's revenue stream.
"iProvo has just become in recent months the dog that everyone wants to kick," Billings said. "Yes, there are problems. ... But we're finding that there are solutions."
Jeremy Duda can be reached at 344-2561 or jduda@heraldextra.com.
This story appeared in The Daily Herald on page D1.