It’s official.

The Selma City Council passed a resolution Wednesday officially agreeing to pay the state of Alabama $650,000 as its part of the Hyundai incentives package. The Council also agreed to a tentative payment schedule.

The schedule calls for the city to meet its obligation in three payments. Beginning Nov. 1 and continuing each successive Nov. 1 for two years, the city will make two initial payments of $250,000 and a final payment of $150,000.

The resolution does not specify how the city will raise the money to make those payments.

“All we had to have by Wednesday’s deadline was an agreement in principle on how we’re going to do this,” Finance Director Bob Sanders said.

Dallas County agreed to chip in $350,000 as its share of that same incentives package. Although Wednesday was the deadline set by the state for participating in the incentives package, Dallas County Commission Chairman Johnny Jones said the county has yet to iron out all the details.

“We have committed to participate, but we haven’t tied it down,” Jones said.

Sanders said the city has several options for financing its payments. Ideally, the money will come from the general fund. That would be the least expensive option.

“The problem is not cash. We’re in a good cash position,” Sanders explained. “The problem is revenues.”

If the city opts to pay with cash, he noted, it might not have the funds available to meet any unexpected opportunities – or emergencies – that arise. And if tax revenues fail to meet projections, paying with cash could lead to cuts in the budget to make up the shortfall.

Another option would be to refinance the city’s debt. Most of the debt the city now carries is financed at around 6 percent, while current market rates are closer to 4 percent, according to Sanders. By refinancing its debt at current market rates, the city likely would save enough money to meet the payments on its obligation to the state.

“The other options,” Sanders said, “are debt.”

The two most common types of debt incurred by local governments are bonds and warrants. The two are similar, though with some important differences.

“A warrant, to the rest of the world, wouldn’t look much different than a bond,” Sanders explained. “The big difference is that a bond usually has a specific tax pledged to it.”

Sanders likened the difference between bond debt and warrant debt to the difference between a consumer who takes out a note on his car and one who incurs credit card debt.

“If you default on a car note,” he said, “they come get your car. If you default on a credit card, they come take whatever they can find.”

Bonds also are more expensive to issue than warrants, because bonds require legal notification and voter approval; warrants require only a vote of the issuing body.

There is one other option, Sanders quipped: “We take donations.”