Doubting Debt


DeKalb County Administrator, Ray Bockman, told the Executive Finance Committee, “If you can borrow money by all means do it.” (Paraphrased)

Paul Stoddard (D) 9th District DeKalb County Board
Paul Stoddard (D) 9th District DeKalb County Board

The DeKalb County Board meets Wednesday night at 7pm and is expected to pass its FY2010 Budget of more than $70 total. Polituhspeaking, it is a balanced budget give or take $1.7 million.

If I understand it correctly the paid staff recommended operating budget had a $1.7 million deficit but covered it via a healthy rainy-day fund. The elected Board asked for alternatives to drawing from the rainy-day fund and for cuts/adjustments. A total of $1.7 million in a savings fund designated for a new county jail was used to cover the deficit as the staff’s alternative plan.

Scott Newport (R) 8th District DeKalb County Board
Scott Newport (R) 8th District DeKalb County Board

At the Executive Finance Committee meeting Board members Paul Stoddard (D) and Scott Newport (R) questioned the fiscal responsibility of transferring $1.7 million from a designated fund (see video) to cover a general operating fund deficit. Good for them.

But a new capital plan calls for $10-12 million in court house renovations and then $30 million for a new county jail will require debt bonds. All those dollars added up, $1.7 mil don’t seem like all that much. Even if Rule of 72 doubles it up to $3.4 mil every eight-or-so years who can refuse the low interest money available to local governmental units because of the economy?

The county has declared itself a Recovery Zone and as such is eligible to issue just under $6 million in debt bonds without voter approval and get a 45 percent interest Recovery Zone Economic Development Bonds refund from the feds. The balance of debt funding for the courthouse addition would come from Build America Bonds which offers a federal government interest refund of 35 percent.

The $10-$12 million in debt would be repaid through a sales tax revenue sharing agreement with the City of DeKalb from the County Farm property which has reportedly generated about $1.2 million for the County each year.

Then the need for a new county jail and its associated $30 million debt would be paid back from an if approved arrangement, between the County Board and Waste Management, that would provide for a major expansion of the landfill just outside of Cortland — in exchange for a revenue sharing agreement expected to generate an estimated $120 million in dumping fees charged to municipalities from outside of DeKalb County over 30 years for the County Board.

Should for some reason, like taxpayer opposition for example, the agreement that expands the landfill does not get approved — or if the revenue were to fall short of projections — the $30 million debt bonds would have to be approved via referendum. That was a tough sale before the County made the court house renovations a higher priority than the jail for whatever reason.

County Finance Director, Gary Hanson, told the Finance Committee not to be embarrassed to pass a budget that only needed to borrow $1.7 million from another fund, however designated, in this economy. That’s because the County’s built up a hefty rainy-day fund.

But the Finance Committee wrestled with the budget. It was their meeting to make a recommendation. Three votes. Three failures to make a recommendation almost resulted in the breaking of at least a 25-year record for doing just that. Then a compromise in wording. The budget deficit would be covered by transferring $1.7 million that was supposed to help pay for building costs and would have reduced the amount of debt and interest charges.

The editors at the Daily Chronicle had to get really creative with their headline writing to avoid the word ‘balanced’: Committee Recommends Deficit Free Budget. Sounds like Diet Pop, don’t it?

Maybe someone with the authority to sell debt bonds ought to take a step back and look at the big picture. They might see a taxpayer sitting on his front porch in the city of DeKalb, for example. The County’s only looking to go $42 million in debt over the next few years. The City of DeKalb’s looking at at least $12 million in TIF debt and that’s if they don’t build a $20 million police station. District 428’s going to issue $110 million in debt bonds.

But wait, there’s more. The DeKalb Sanitary District has some debt bond financing plans in mind for the near future. The DeKalb Park District is looking at $10-$15 million in debt bonds. What’s that I hear? The DeKalb Public Library needs new construction debt bond financing.

That’s all new debt. Maybe a quarter of a billion dollars worth… before interest that does that Rule of 72 double-up every eight years or so.

I, for one, am doubting the debt.


  1. MAC Irony number one. Don't forget the third business man on the council. You know the one that does not pay prevailing wage, payroll taxes etc. It is now clear why he was the low quote. He simply did not follow the rules and laws the others had to follow.

    Which leads me to Irony TWO. I seem to remember discussion that the council wants to be sure companies that are given tax breaks also provide Health Insurance to their employees. I find it Ironic that the council wants to demand an outsider provide Health coverage for their employees yet turn their back on their fellow council members failure to follow the law and just sweep things under the rug. But remember what the Mayor says, "everyone is entilted to make a living". Even if they do it by not abiding to the law I guess?

  2. So because part of Target is in a TIF zone, those dollars are going to TIF and not the school district. Mac, if you were to question 100 citizens of this community and asked them if all of the Target property that is due the schools was actually going to the school district or TIF, most if not all would answer to the schools.

    I don't remember TIF being a big conversation when Target started, all I heard is how many dollars the school district would be getting. I guess those dollars are much less than we all thought. I still do not believe that when all is done and over that the schools are made whole by the citys TIF agreement.

    Thanks for that information Mac. It's good to see more citizens waking up and getting involved. Hopefully boards and councils are starting to notice.

  3. There's a couple of interesting notes on the Target issue. First irony: The two businessmen on the council, Baker and Gallagher, took the hardline lead on the issue. One of them (I think Baker) said, "In the private sector we honor contracts."

    This Target center is in a TIF (at least partially). It was declared TIF as vacant land and that is what the school district's tax share will be based on. The $60k is a General Fund refund. The "TIF" portion refund was somewhere around $300k which I believe is an increment increase subject to TIF. That $300k would be the school district's share IF not for TIF.

    3 cheers for Kay. A tax summit is sorely needed.

  4. Hi Kay, An interesting perspective. What a dream world it would be if we could get all governmental bodies to consider their citizenry before trying (and seldom succeeding) to solve their problems with more taxes!

    I was at the school board meeting last night and suggested to them (as an authoritative governmental body in their own right) they need to avoid becoming mired by other governmental bodies (City of DeKalb for example) in determining their position on the unmet Target rebate qualifications. Certainly a lesson our school district leadership needs to learn…that they have more control over the spending side of the budget equation, and a lot less control over the revenue side. Even so, they should take control of that revenue side when they can for the good of the district. Fewer variables equals better stability and likely lower costs.

    Resisting dependence on state funding, avoiding participation in inter-governmental agreements that restrict their own authority (TIF), and strongly negotiating for themselves, up front, when incentive programs (Target rebates for instance), are being discussed, and finally, sticking to the agreements after negotiations are done makes their position stronger and should engender public trust. Unfortunately, it appears the school board (others tax levying bodies also?) tend to follow the lead of the City of DeKalb, which has serious problems right now.

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