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January 24, 2014

County sets up line of credit

MILLEDGEVILLE —

The Baldwin County Commissioners voted 3-2 to accept a Tax Anticipation Note (TAN) from Century Bank & Trust establishing a $7 million line of credit to be drawn as needed at Tuesday’s regular meeting.

With an interest rate of 2.09 percent, estimated interest payment is $95,000.

“We aren’t going to borrow money we don’t need. We are just going to borrow it as we need it,” Commission Chair Sammy Hall, District 3, said. 

Citizen Harry Keim said he wished the county would establish a reserve fund to eliminate costly borrowing each fiscal year.

“Talk to any CPA or accountant. It’s part of the normal way of doing business, and you are not doing it,” Keim said Tuesday. “That’s how you cut down borrowing so much money.”

Hall said the fund balance is the reserve.

“If our fund balance is large enough, we wouldn’t have to borrow so much money,” Hall said.

County Finance Director Dawn Hudson said the county ended 2012 with $80,000 cash reserve and went over half a million dollars in 2013.

“We have improved, but with our budget that’s $1.2 million a month, our operations are pretty high,” Hudson said. “You have to have a high cash reserve to get you through the year.”

Hudson said emergencies like the recent water shortage and subsequent price tag associated used these funds.

“It’s not that they won’t have the money within the year to pay for it, but they may not have it all now,” she explained. “They have to go through a year’s collections. Those are good reasons to establish a healthy cash reserve.”

Commissioner Henry Craig, District 4, said the county couldn’t plan on borrowing $7 million each year. 

“Eventually, the interest rate is going up,” he said. “I stated how dangerous that could be in our future.”

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