 The budget for the 2013 fiscal year will already be tight, but the
added expense of major criminal court cases in the upcoming year
would prove too extensive to support without significant impact to
core jobs, services and support for valued community agencies.As
the board weighed whether to sweep funds to all levied agencies --
such as the health department, emergency management agency, Oasis
and others -- as well as steeper cuts to all county department
budgets, against borrowing, borrowing won favor.
With consent of the Logan County state's attorney's office,
finance chair Chuck Ruben turned to First Midstate to ask about
bonds to cover the costs.
This month, David Pistorius, a representative of First Midstate,
met with the finance committee to explain the options and process of
taking out bonds and was then asked to present to the full board on
Sept. 13.
Pistorius said the board had two options. One option was a
general obligation bond. These bonds have a tax levy, and the board
would have to go to a referendum in order to issue this type of
bond.
However, due to the need to pass a budget in October with the
funds in it and with the election not until November, the board does
not have the time for this type of bond.
Instead, the county may use alternate revenue bonds. These bonds
have no tax levy, but the board would have to pledge current sources
of revenue to pay the money back. As part of a feasibility report,
the board would also have to prove they have an extra 25 percent
coverage beyond the borrowed value. The extra 25 percent would not
have to be paid; just prove that it is there. The authority of the
bonds would be good for three years.
There are three steps involved with alternate revenue bonds. The
first step is to adopt an ordinance of intent. The ordinance has to
circulate in a newspaper, followed by a 30-day petition period. If
7.5 percent of registered voters sign a petition, the process can be
stopped until the next referendum.
The second step is to conduct a public hearing. A notice has to
be in circulation at least a week before the hearing. This will
provide a chance for the public to learn more about the bonds.
The final step is to formally adopt a bond ordinance. Bonds are
sold a week to 10 days before the ordinance is adopted. Funds are
received in full around two weeks after adoption. Bonds are
typically sold locally to banks and similar institutions first.
Pistorius also provided an estimate for an interest rate of
around 5.5 percent for a 20-year issue. Should the revenue stream
used to pay for the bonds run out, then taxes would have to be used
as a backup means of paying off the bonds.
The county board wants to see the $600,000 the bonds would bring
locked into the new budget; otherwise, the county has to find the
money elsewhere in the budget, which would not be good for the
county's already strained finances.
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"It's a one-year problem, but it's really ugly for everybody in
that one year," said Ruben.
"The next cut would be jobs," added Kevin Bateman.
In 10 years the bonds may become callable. Should the county have
the capability, it then could pay off the bonds in greater amounts
to save on interest.
Pat O'Neill asked how the board could justify such an expense to
the citizens of Logan County to pay for one trial.
Ruben reiterated that the board was not talking about one trial,
but rather the major criminal cases line item in the budget.
The exact costs of the particular trials that are scheduled to
begin in the next year are not known. Three figures were considered
for borrowing: $1.2 million, $1 million and $600,000.
Ruben made a motion for an ordinance of intent to sell bonds in
the amount of $1 million. The motion was seconded by Terry Carlton,
and it passed.
Ruben explained that while they are publishing a notice for $1
million, the county may find later that they do not need the full
amount. The budget for next year is written under the assumption
that $600,000 will be used for major criminal cases, with a $400,000
contingency fund, as it cannot be predicted whether or not expensive
new cases may come up.
The board was also informed that previous bonds taken to pay for
the Sysco building in 2005 may become callable in 2015. It may be
possible to use money left over, if any, from the contingency fund
created by the new bonds to pay off the older Sysco bonds. A future
board could also use the contingency for other purposes.
Carlton clarified about the use of the money to be placed in a
line item. "The courts can only draw from that fund (major criminal
cases) for cases we have agreed upon. They can't just draw from that
for anything," he said.
Chuck Ruben made a motion to approve the notice of intent to
issue bonds in the amount of $1 million. The motion also included
the right to petition, should members of the public wish to do so.
The motion was seconded by Terry Carlton.
A roll call vote was taken with full board present. The result
was 11 votes in favor, and one board member, Pat O'Neill, voting
against. As a result, the notice of intent was approved by the
county board.
[By DEREK HURLEY] |
