VIDALIA — The Vidalia Board of Aldermen voted Tuesday to seek a line of credit to borrow up to $3.5 million to keep the town’s government operating.

Mayor Buz Craft said the town would go before the state bond commission to get a line of credit to get a loan from Concordia Bank and Trust at a rate of 1.5 percent. Craft said the town would have until March to pay back the funds or renew the line of credit for the remaining balance.

“The City of Vidalia is going to be OK,” Craft said. “This is the first hurdle in the big race, but the race will be won by us for sure.”

The town had a $4.9 million deficit in the 2015-16 fiscal year which ended June 30. The annual budget was $37.3 million.

Craft said the deficit knocked the town’s cash reserves down to $1.6 million. The reserves will be needed soon to purchase electricity that is then resold to town utility customers, Craft said.

Utility revenues have put the town in position to meet payroll for this month, Craft said.

Despite initial personnel cuts after Craft took office in July, payroll and benefits will cost the town approximately $300,000 today. Craft would not provide specifics on cuts, but said the staff reductions were at the convention center and other town departments, but did not include the police and fire departments.

Craft said the town owes vendors — which provided services to the previous administration — approximately $1 million.

Over the last 120 days, Craft said the city ran out of money to pay the vendors.

“Those vendors deserve to be paid,” Craft said. “I don’t feel like we should let the vendors sit there calling on us for a check to be paid.”

One upcoming inflow of cash the city will receive around Aug. 1 will be royalties from the Sidney A. Murray Jr. Hydroelectric Station of approximately $3.8 million. Craft said that money would be used to pay the vendors until the loan comes in, build reserves back up to town statute of $2.3 million and pay for electricity for the upcoming months. Craft said the city would not be increasing millage or utility rates.

“I feel like right now, this isn’t the time to do that,” he said. “The hot weather is hurting people enough. I feel like we can overcome this without raising rates.”

Craft said the town hopes to not borrow the full $3.5 million, but he wanted to ask for what he hoped was more than needed in case there was trouble with the port or other town projects later.

Craft said he did not want to come back in future months asking for more money.

“We want to be prepared to get through the next two quarters, for sure,” he said.

Craft said he hopes the city borrowsless than $2 million, but said he’s still getting acclimated to the city’s financial situation.

When the audit he has engaged is finalized, Craft said he hoped to understand how a 13-percent gap existed between the city’s spending and revenues.

The city has made cuts to payroll, and Craft said he planned to get out of some contracts he claimed were doing nothing for the city which would help further trim the budget.

“We will have to amend our budget, that’s one of the first things we will have to do,” Craft said. “We are starting to do cuts, so I feel like we will be fine.”