The Corporation of St George’s was just weeks away from being forced to shut down at the start of the year because of a cash crisis.

Home Affairs Minister Michael Fahy said the municipality’s financial situation “was at such a critical state” in January that it was considering either making staff redundant or shutting down until for the remainder of the financial year.

The crisis was avoided after Government last week stepped in with a $750,000 cash windfall to cover operational expenses and upgrades to the World Heritage site.

Sen Fahy said: “My technical officers and I met with the Mayor of the Corporation along with his council in early January to discuss the corporation’s current financial situation which, as the mayor indicated, was at such a critical state that they would have no choice but to either lay off a number of staff or cease operations until the start of the next fiscal year.”

“During the discussions, the mayor advised the Corporation would need a cash injection of $500,000 for operational purposes, in which $275,000 would be required on an urgent basis to prevent their operations beyond mid-February 2014.”

Sen Fahy said that the remaining $225,000 was needed to cover operational costs for April and May.

He said that, when he asked Mayor Garth Rothwell why the Corporation was “in such dire straights”, he was told that the municipality had been suffering budgetary shortfalls since 2010, when the municipality was prohibited from levying taxes.

“Since that time, the annual deficit of up to $450,000 was routinely funded by the former Ministry of Works & Engineering through a virement,” Sen Fahy said.

He added that, according to Mayor Rothwell, furlough days could not be introduced because staffing levels had already been cut to “the bare minimum”.

The Corporation now employs 18 staff, compared to 27 just a few years ago.

Sen Fahy said that, on top of the $500,000 required for operational expenses, the Corporation had also requested an additional $250,000 to pay for the upgrade of public bathroom facilities in King’s Square.

“In fairness, the Mayor acknowledged the timing of this request was not ideal in light of all the measures Government is undertaking to reduce expenditure,” Sen Fahy said.

“However, he reiterated the urgency of such support to ensure unemployment levels would not increase and that the infrastructure to the old town would not fall into further disrepair.

“I simply could not sit idly by while the Corporation of St George’s, considered by those in the east to be God’s country, continued to fall into further disrepair or, even worse, close its doors until funding of some kind was realised.

“This $750,000 one-time grant will now ensure employees of the Corporation will remain employed, will be able to take care of their families, and the town can be beautified in time for the tourism season.”

Accepting the donation last week, Mr Rothwell thanked Mr Fahy “for championing our request for funds”.

“The Corporation is working on a five-year plan to tackle other concerns with our ageing infrastructure and projects to enhance the town for both our residents and visitors,” Mr Rothwell said.

“This plan will provide the information necessary to facilitate a rebalancing of the budget in the next few years in favour of St George’s, which has not received its fair share of funding for far too many years.”