The Oneida County Board of Supervisors once again debated whether to borrow money to pay for needed capital improvement projects (CIP), and this week the board again rejected the idea, choosing instead to avail itself of ready cash already sitting in its general fund.
The board had also rejected an effort to borrow money last November.
Like last November, advocates for a loan needed three-fourths of the entire board to approve any borrowing, which this time around was a proposal to apply to the state Board of Commissioners of Public Lands (BCPL) for what was effectively a line of credit.
The initial proposal was to borrow up to $2 million, but that was pared by more than a half-million dollars when supervisor Steven Schreier offered a compromise amendment that passed 13-6.
However, with one member absent and one seat vacant, supporters of borrowing could not even muster a majority of supervisors attending the meeting for the amended motion. It gathered just nine yes votes, with 10 voting no.
The decision before the board was pretty straightforward, county board chairman Dave Hintz explained to supervisors before the debate and the vote. In its 2020 budget, the board had decided to use about $4 million from the general fund for four capital improvement projects, the biggest being a sheriff's department radio infrastructure upgrade that will cost in the neighborhood of $3.5 million.
But that left nine capital improvement projects wanting, at a total cost of a little more than $2.2 million. The projects weren't the issue, Hintz explained, it was how to pay for them.
The nine remaining items for 2020 included additional funds for highway reconstruction and various IT infrastructure upgrades and projects, as well as Taser replacements for the sheriff's department and a law enforcement body scanner, among other things.
The county was again left with two options to fund the remaining critical projects, Hintz told board members. One was borrowing, he said, and one was to draw down the general fund even more.
Hintz favored borrowing the money.
A BCPL loan, he said, came with a reasonable interest rate, while the county could draw on the loan as needed. In addition, the BCPL offered a flexible repayment plan so the county could pay off the loan earlier if it wanted to, and the county would incur no upfront loan fees as it would with bonding.
Those latter costs could range between $50,000 and $70,000 if the county bonded for the money, Hintz said. On the other hand, the county board chairman said, decreasing the general fund even more could imperil the county's current bond rating.
"Our goal is to remain in excellent financial condition," he said. "We're very stable financially. Our outlook from our auditors is very, very solid. In fact it's excellent. We want to keep the county in an excellent financial position and manage our money properly."
Again, Hintz reiterated, the debate was not about the projects themselves.
"These project lists have been worked very hard by a lot of people," he said. "They're good to go, meaning we have to do these projects. The real issue is how do you pay for the additional projects. The list has received a lot of review and a lot of input and a lot of tweaking."
The fiscal impact on the general fund was a major point for those supporting borrowing.
At the end of 2018, the general fund had about $16.3 million in it. But setting aside an emergency reserve equal to 3.5 months of general fund and social services expenditures, or 29% of the county's annual expenditures, came to almost $8.9 million.
Subtracting that and other 2019 spending for CIP projects and operating expenses, plus various revenue offsets, actually left the county at the end of 2019 with about a $7.3 million excess.
The 2020 budget approved in November will further reduce that amount by committing $376,000 to fund 2020 general operations and using $4 million for the four approved CIP projects.
That would leave about $2.9 million in the general fund bank, but loan advocates warned that taking almost $2.3 million of that for the remaining nine CIP projects would reduce the general fund excess to just $633,782 and imperil the county's bond rating.
Among other things, however, opponents of borrowing observed that the $633,782 was over and above the almost $8.9 million set aside for the emergency reserve - the amount county auditors recommend - so there was actually a lot of money left in the general fund to pay for the capital improvement projects.
Down the rabbit hole
Supervisor Bill Liebert worried that the county was digging a fiscal hole it would not be able to climb out of.
"I look at this through my eyes as a sole proprietor with a pretty tight budget, and trying to put a plan together for myself," Liebert said. "Every year we have more expenses."
Liebert observed that estimated CIP project costs already total $2.2 million for 2021 and $3.7 million for 2022.
"That has to be part of this conversation if we are going to go into debt to cover these things this year," he said. "What are we going to do next year and the following year and the year after that?"
Meanwhile, Liebert said, the county continued to spend for unneeded programs and tools, such as $66,000 for impervious surface software that will allow the county to map the outlines and areas of all buildings countywide.
"That's a small number, but it's those sorts of things that just compound on each other and at some point we are going to be faced with some very difficult decisions," he said. "I don't know what those will be, but we just continue to go further and further and further down into a hole."
The point was, Liebert said, it's easy to give money that isn't coming directly from their personal pocketbooks.
"In my sitting here for two years now, I've sensed even in myself that it's just easy to say, 'yes, yes, yes,' but I just don't see how we're going to be sustainable in the future with our expenses and how we raise our funds," he said.
Supervisor Scott Holewinski pointed out that the county's debt from building its law enforcement center had been paid off for 10 years but the levy for that debt continues to be collected from taxpayers.
"The reason we're in this problem today is, we were paying $2 million a year for so many years and then a million the last year (for jail debt)," Holewinski said. "We never took it off the tax roll. All we did is increase the size of government, and now 10 years later we can't afford to do capital projects. If we had that $20 million today, we would have our road projects caught up and none of these projects would be an issue."
Instead, Holewinski said, the board started adding all sorts of programs, such as an aquatic invasive species coordinator and a dive team.
"We had all that extra money, and all we could see was all these extra things we could have," he said. "Now we go on down the road and nobody wants to cut one program. We just want to borrow money."
Holewinski also criticized the county board's practice of using the general fund to cover ongoing operating expenses. That totaled approximately $49,000 for 2019, but the county has voted to tap $376,000 from the general fund in 2020, and Holewinski said comparing the two numbers was telling.
"It tells you we are going backwards," he said. "We have to keep taking more money to cover our operating expenses, which I am against, too. So if you take that $376,000, you have to add that into the borrowing at this point."
State gun to the county head
Supervisor Robb Jensen said those opposing a loan were simply in denial.
"Today we have to take a look at the future," Jensen said. "Is there anybody here who can look at the five-year CIP plan and suggest that we are not going to have to borrow money at some point to pay for those? (Former finance director) Margie (Sorenson) told us this. Darcy (current finance director Smith) told us this. The time comes when the county has to find additional revenues."
How to do that?
"Go to referendum? Borrow? Or find a tax?" Jensen asked. "I don't think we are going to have Bill and Melinda Gates coming to the county and saying, 'Oh, Oneida County, we feel bad for you and here's $15 million."
Jensen said he wanted to see an option that gets the county through 2020 and allows the county board the time to look at the next five years and plan, and the $2-million loan proposal provided that option.
Supervisor Bob Mott said the state was forcing the county to borrow money.
"We're forced by the state to do what's happening right now," Mott said. "The out that they give to increase taxes, which we would do just by a simple vote in any other circumstances, but they are saying the only out you can have is by borrowing. You can't tax over real growth."
But the county's increased ability to tax for net new construction wasn't very much, Mott said.
"Unfortunately we're forced into this," he said. "If we chose to without the state forcing that, that's one thing, but the state is forcing us. They are making us do what we are doing today."
Supervisor Billy Fried pushed back on that idea.
"I am not going to wave the flag that the state has made it miserable for us," Fried said. "All the state was saying was, 'stop the spending and really look at your spending and keep it under control.' If you have to go above the limit, they did give us opportunities - referendum, or increase your revenues through fees, or even take out a loan and go into debt and put the payments on the tax levy. There are options. No matter what happens here today we'll be able to meet the challenges ahead."
But Fried said what was being proposed with the loan was not sustainable in the long term.
"There are a lot of good strategies that you could take if it was your money and your money alone," he said. "But we are here to represent the taxpayers and the theme I hear from them is that they look at millions of dollars that you have in a savings account and you want to protect some of those millions and go out and ask them for more money just to protect that amount. And I can't do that to them."
Supervisor Jack Sorensen said the county tended to bet on revenue sources such as timber harvests and state inmate revenue, but those are not always reliable, as the down year in stumpage revenues demonstrated.
The county simply must look at making serious spending cuts, Sorensen said.
"We looked at two at the November meeting," he said. "It might have a been a total of a quarter of a million dollars, but in my opinion this county board is not into cutting spending. You're going to have to really take a hard look at some of these programs and say, 'it would be nice but we can't afford it.'"
Even the county's bureaucracy weighed in on the debate, with land information director Mike Romportl urging the county board to borrow the money. Romportl sits on the county's capital improvement projects subcommittee, but he said he was speaking for county staff as well.
"I see this $2 million loan as a bridge to get us through this," Romportl said. "It gives you a chance to regroup for next year and take a look at where we are at. ... I know we don't want to go into debt, but I think this continues to protect the very good financial standing of Oneida County."
County staff agreed, Romportl said.
"I speak on behalf of most of our department heads that were at a meeting last Friday," he said. "We were discussing the impact of this and where we are looking down the road, and they were very much in favor of this, also."
Schreier attempted to forge a compromise, offering an amendment that would reduce the amount to be borrowed to $1,467,000, which he said would reduce the county's reserve from 3.5 months of operating expenditures to three months.
The motion to amend passed 13-6.
But the motion to borrow even that failed by a large margin to gain the necessary 16 votes, with just nine supervisors supporting it. That led the board to the resolution to use $2,267,635 from the general fund.
Both Mott and Jensen expressed their displeasure. Mott chastised the board for ignoring its financial advisor, and a visibly upset Jensen suggested that the county board just refuse to fund any of the remaining projects.
"The defeat of the last resolution puts my constituents and me in this position," he said. "We could decide not to fund any of the projects if this doesn't get two-thirds. And maybe that's what should happen. We talk about wanting to make cuts and be fiscally conservative. Let's not fund any of them and let's go back and start all over with capital improvements. To reduce our general fund to $633,000, and another resolution before us today will take us down another $142,743 [for highway department winter maintenance overages]. If that's fiscally responsible to our taxpayers, I don't know how you run your personal finances, but I wouldn't do it."
Jensen changed his mind, though, and the resolution to use $2,267,635 from the general fund passed 18-1, with Mott voting no.
Richard Moore is the author of the forthcoming "Storyfinding: From the Journey to the Story" and can be reached at richardmoorebooks.com.
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