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