At yesterday's Finance Committee meeting of NorCo Council, Executive Lamont McClure made the case for borrowing the money needed for a new garage and office building at the courthouse campus. (Preliminary plans were discussed
here). His basic argument is that the county is in a very good financial position to assume more debt.
McClure stated that there have been no tax increases in any of the past six budgets presented, including a tax cut in 2022. During that time, the size of county government has actually decreased 31% ($121 million). Moreover, during these six years, outside auditors have annually given the county a clean bill of financial health.
He also addresses the claim that he is only able to do these things by cutting into the county's fund balance and reducing it until a massive tax hike is necessary. That's just untrue, he observed. He told Council that the average fund balance over the past six years has been $48 million. He predicts it will be $50 million this year.
Fiscal Affairs Director Steve Barron followed McClure. He explained that municipal debt is financed through Non-Taxable Bonds sold on the secondary market. "Acquiring debt to construct buildings and infrastructure for government services effectively reduces the burden on today's taxpayers, distributing payments over the useful life of the facility so that those benefiting from it contribute to debt service payments."
According to Barron. most municipalities consider $1,600 to $2,000 per person as a reasonable debt load. If the county assumes new debt to finance the garage and office building, the burden per taxpayer would be $440.73, which is significantly below the average.
Barron also told County Council that the total assessed value of taxable county property is over $10 billion. The debt burden of financing a garage and office building would be 1.4% of the county’s assessed value.
He also discussed the $100 million in annual revenue generated by the county. While many municipalities allocate between 40% and 50% of their revenue to debt service, Northampton County's allocation is notably lower at 16.6%. "In summary, with over a billion dollars of borrowing capacity, we currently utilize only 8.2% of that capacity. The new proposal would bring us to 12%. These factors contribute to Northampton County's Aa1 rating from Moody's and its status as an excellent credit risk, attributed to our timely payments, robust revenue, prudent debt management, and conservative approach."
Barron then introduced Scott Shearer from PFM, who discussed the options for borrowing $60 million in new debt. He said current rates on bond debt are about 2.6%, below historical averages. Moreover, the county can invest this borrowed money with a 4% return rate until the money is needed. He added that demand is high for tax exempt bonds from highly rated entities like the county.
There are two ways to re-pay a $60 million bond. The first is through level payments over 20 years, similar to a typical mortgage. The second is through wrap around payments in which the amounts increase over time.
Shearer told Council that borrowing $60 million should have no adverse impact on the county's bond rating.
18 comments:
Building Che McClure is wonderful but let's not forget the need to pay county employees a living wage. Thank You !
Give the money back to its owners, the tax payers. Was that considered by aloof ambulance chasing rich guy with redder face than WC Fields? Typical tax and spend democrud. More debt. More debt. More debt. What does one expect from a pig but a grunt. Sigh......
Get rid of McClure and his Administration! Taxpayers can't afford him. Employees hate him.
The beginning of the end of free county parking. Mark my words, McClure and his illustrious county council will begin charging county employees for parking permits and the public will be forced to pay for daily passes.
Except for the judges of course, because although they make four times the average salary of a county employee for making arbitrary decisions all day long, for some reason they’re held to a higher standard than most of us.
I'd say go for it except I see no place for a pool and gym. Besides I don't live in Norco so I really don't care.
Just don't let the dixie cup or niz people handle it
7:25, The fact that Barron mentioned several weeks ago that county employees do not pay to park tells me this is something they are considering. I could see charging the public to park.
Tough luck you are stuck with him for 9 more years. No serious Dem will run in the primary and Republicans can no longer win in Norco.
More political patronage for the trade unions who donate generously to the McClure campaigns.
7:25, from Steve Barron: "We are not ever going to charge employees to park."
It appears that several of the commenters here have already been hit in the head by chunks of concrete falling off the garage.
The finances are good now. Someday we will have a recession and McClure and Barron will leave a fiscal mess when they’re done. Then the next guy will get blamed because he or she will have no choice but to raise taxes.
Sorry Bernie, but I don’t believe anything that comes out of Barron’s mouth. They’ll come up with an unexpected “maintenance” fee and the burden will once again, fall on county employees. And judges and administration heads will pay nothing. Just remember this post, it’s gonna happen.
This post is about financing mechanism for the $60 million project, not its necessity. Anyone who parks in that garage knows it needs to be replaced. Anyone who visits the elections office knows it is in desperate need for more space.
@10:59 talk about bad takes. Did you read the post. The County is in tremendous financial shape, and this is despite having the economy ruined by Trump’s failed response to the Covid-19 pandemic.
I agree
“The burden per tax payer would be $440.00 “ wait -you mean resident or tax payer ? The tax payers are a lesser number than residents.
Lehigh County employees pay to park at the county-owned garage and lots. Just some food for thought...
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