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.”
Craig said better financial policy would direct Hudson to create an “unassigned fund balance.”
“We are three weeks into the year and have still done nothing to address our expenses, revenues and our ever-present demand for $7 million of borrowed money,” the District 4 Commissioner said. “It will be a crisis if interest rates doubled.”
Hall said extra collections from business licenses or other taxes wouldn’t be a large amount of money.
Decreasing spending isn’t probable considering the county just cut its budget by $4 million.
“We just passed a budget we all agreed on that neither increased revenue or decreased expenses,” Hall said Tuesday. “That was an opportunity for us to take that action that we didn’t do. I think we are all sitting up here in the same situation.”
Commissioner Johnny Westmoreland, District 5, agreed with Craig saying the county hasn’t taken a close enough look at revenue streams.
District 2 Commissioner Tommy French said, “our county’s employees and services have been cut to nothing.”
“We looked at it thoroughly,” French said. “Don’t say we didn’t. We knew this was coming.”
Craig said every revenue stream dollar counts when determining if the county gets all it can from each.
“We acknowledged last year that we would do that, and we haven’t done a thing,” he said.
Hall said the decision might not be pleasant.
“We’ve got to continue to do business,” the chairman said in closing. “We’ve got to run the county.”