County may have to borrow money to meet budget

Published 2:12 pm Friday, June 1, 2012

Perry Henry, a local CPA who is assisting the Decatur County Board of Commissioners with its budgeting process, told the county Thursday that it may have to borrow money before the end of the current fiscal year on June 30.

The commission fired former Finance Director Carl Rowland on May 22, and Henry has been helping the county with its financial matters since. At a called meeting Thursday, Henry gave the commission an update on both the current fiscal year’s budget, and the budget for Fiscal Year 2013 (July 1, 2012, through June 30, 2013).

In a letter given to the commissioners, Henry explained “it appears the county will need to make an immediate payout of several hundred thousand dollars,” on an upcoming contract with Motorola to upgrade the county’s emergency services and broadband communication systems. This upgrade is mandated by the federal government and must be completed by January 2013.

Henry told the commission that Rowland had already made several RFPs (requests for proposals) to local banks for a Tax Anticipation Note (TAN), not to exceed $3 million. A TAN is a special loan used by government where it borrows money, then quickly pays it back once tax receipts have been collected — including the insurance premium tax in September or October, and the property tax revenues in late 2012.

“It is very good that these steps have been taken, because it seems nearly impossible to see a way for the county to meet current cash flow needs [without the TAN],” Henry wrote in the letter.

Henry told the commissioners that it would be a good idea to apply for the TAN, even if it ends up the county does not need to borrow the money. He also said it is not unusual for governmental entities to use TANs to meet short-term deficits.

Henry also gave an update on the FY 2013 budget, which is due June 30. He said the current outlook shows the county is facing a $1.5 million deficit.

“It’s still early in the process, but I believe that right now we’re going to be short in the general fund,” he said. “Certainly, we are trying to make cuts in spending wherever we can.”

Henry also said that the county’s landfill has been “a real positive cash flow” for the county in the past three years, and could help make up some of the deficit. In addition, there is the possibility of federal or state grant money that could help meet the needs of capital expenditures.

“At this point, those proceeds are not that significant, but every dollar helps,” Henry wrote.

In addition, the county has a $1.59 million SPLOST revenue bond payment due July 1, but currently there is only $660,000 available in the SPLOST account. Although the county is expecting $800,000 in proceeds for May and June, there will likely still be at least a $129,100 shortfall that would need to be made up through the general fund.

Henry said SPLOST proceeds have not come in as much as projected, likely due to the general downturn of the economy. However, he said that recent SPLOST returns are higher than previous months, showing the economy may be slowly improving.

“When we made this SPLOST, we were projecting, based on a pretty strong economy,” he said. “I don’t think anybody saw this downturn coming, and especially not the length of this downturn.”