NATCHEZ — The City of Natchez will ask Magnolia Bluffs Casino to pay one-quarter of its annual lease payment in advance or the city may be forced to take out a loan to cover a cash shortfall to pay employees and bills.

Ward 1 Alderwoman Joyce Arceneaux-Mathis informed the Natchez Board of Aldermen at a Tuesday meeting that after talking to Interim City Clerk Melissa Hawk, the city apparently does not have the cash to pay employees or the docket, which is scheduled to be approved for payment by the aldermen at next week’s meeting.

The board asked City Attorney Robert “Bob” Latham to contact Magnolia Bluffs Casino President Kevin Preston to see if the casino can pay in advance the remaining $250,000 in lease funds owed to the city for this calendar year. The casino currently pays its lease in monthly payments of $83,333. The casino leases city land at the foot of Roth Hill Road for its casino at a rate of $1 million per year.

If the casino chooses not to pay the lease funds in advance, the aldermen gave Hawk permission to take out 90-day loan, which would be paid back each month as the casino lease money is received by the city.

Any interest incurred by the loan may be covered by additional funds the city may receive from the casino because of increased profits and a consumer price index adjustment, Arceneaux-Mathis said.

Additionally, the city will need a tax-anticipation loan for the next fiscal year, which begins Oct. 1, in order to make it through January when ad valorem taxes begin to be received, Arceneaux-Mathis said.

While Ward 6 Alderman Dan Dillard said he does not have a problem with the loan, Dillard said he did not want the 2016-17 budget inflated with the loan counted as a revenue.

Hawk said the revenue would essentially be a wash, because the budget would reflect that the loan has to be paid back in March. She also said that if the city does not budget the tax-anticipation loan, it cannot take out the loan.

The aldermen approved budgeting a $1 million tax-anticipation loan in hopes of not using all of it. The city used approximately $770,000 of the $1 million tax-anticipation loan it took out in the current fiscal year.

In discussions of how the city’s finances got to this point, Arceneaux-Mathis said the aldermen could have put off a grant or project for a year, instead of overcommitting the city funding and tying up cash flow.

“Now, we are at this month, and (Hawk) has got to figure it out, and she’s only been here a month,” Arceneaux-Mathis said.

The aldermen and Hawk have been wrestling with balancing the budget for the upcoming fiscal year in the face of a little less than $500,000 deficit.

The aldermen recently discussed dedicating $500,000 of the casino’s $1 million annual lease payment to offset the deficit. Dillard said Tuesday that before the aldermen finalize that commitment, they should review areas of the budget where spending has increased, such as the mayor’s office, city clerk’s office and other departments, to see if that spending can be cut.

The city’s budget discussions come on the heels of an audit revealing the city overspent its budget by $1 million in the 2014-2015 fiscal year and reports from the clerk’s office that the city is on track to do the same in the current year. The talks also follow the termination of former city clerk Wendy McClain, who was fired a few weeks ago for an unspecified violation of city policy.

Hawk replaced McClain in early August, but the clerk’s office was hamstrung again last week when an accountant abruptly resigned.

The aldermen agreed Tuesday to allow Hawk to hire a contractor at a rate of $30 an hour to reconcile the city’s bank accounts, which as of several weeks ago had not been done since September 2015.

The accounts left to balance, Hawk said, are the ones with the most amount of funding.

Ward 3 Alderwoman Sarah Smith suggested contracting the reconciliation work, saying the city has an urgent need to know where it stands financially.

The aldermen will pick up budget discussions Monday and are scheduled to vote on the budget at their Tuesday meeting.