The city of Reno, Nevada, has found itself in a tough position. The city mishandled short-term loans that were supposed to be paid back in one year. The city’s failure to understand the terms, however, means these loans will be stretched out over 10 years.
Reno’s short-term loans
The state of Nevada provided more than $8 million in short-term loans to the city of Reno, Nev. These loans were intended to be used to support the streets department, sewer department and the city’s general fund. The state expected to have the money paid back within a year. When that year came to an end, however, the city didn’t have the money to repay the state and didn’t even know that it had to be paid back. City officials are calling this an “incorrect interpretation of current law.”
Loans being re-written
In order to handle the $8 million debt to the state of Nevada, Reno officials are trying to get the loans re-written. The debt is being stretched from a one-year obligation to a 10-year obligation. The city will be required to pay more interest on the money, and the state will hold the loans over time. In the short term, this is another $8 million worth of money the state will have to cut out of its yearly budget.
No investigation into funding mismanagement
Though the city of Reno misread the rules regarding this loan, there will be no investigation. Nevada Taxation Director Dino DiCianno has said that this mishandling is a “technical violation of state laws.” Though it is a legal violation, the state will not be investigating the city officials. Instead, the state is going to review and approve the re-writing of the loans into a 10-year debt. The state is responsible for reviewing each city’s budget, so the responsibility for missing the loan payments is shared. Who, exactly, shares the responsibility for “misinterpreting” the state law will not be investigated.