NorCo Council Approves $50 Million Emergency Loan For Human Services

Budget Administrator Doran Hamann and
Fiscal Director Jim Hunter

As a result of a record state budget impasse, Northampton County has been paying human services providers out of its own pocket, but its running out of money fast. Last night, Council adopted an emergency ordinance by a 6 to 3 vote that will enable the County to borrow up to $50 million to cover human services costs through march of next year.

Under the County's Home Rule Charter, Council has the power to adopt an ordinance the night it is introduced "[t]o meet a public emergency affecting life, health, property or the public peace."  But a super majority of six votes are needed.

Fiscal Affairs Director Jim Hunter had previously reported that the County has enough money to ensure that services are provided until the end of the year.

"What has changed?" asked Scott Parsons.

"Nothing has changed," replied Hunter.

"Well, then it's not an emergency," concluded Parsons, who would have preferred waiting until later in the year before seeking a $50 million loan.

Hunter, Budget Administrator Doran Hamann and Executive John Brown nevertheless insisted that now would be the time to take out a loan. According to Hamann, the County's fund balance has dwindled down to $19 million, compared to $62 million at this time last year. Once the fund balance drops to $5 million, the County will incur penalties for early redemption, making it cheaper and more fiscally prudent to borrow.

Hunter reported that he has been in discussions with five different banks, and can get interest rates in the vicinity of two per cent. There will be no loan origination fee, Hunter assured Ken Kraft.

"The earlier we can get this approval, the easier it is," stated Brown.

Lamont McClure asked whether the $19 million fund balance reported by Hamann includes the County's $10 million rainy day fund. Hamann replied it does not. An incredulous McClure asked why on earth the rainy day fund can't be used when the County claims it is raining. Hamann answered that it would cost too much money to get at the money.

Voting against the ordinance were Scott Parsons, Ken Kraft and Lamont McClure. "It doesn't support the definition of emergency," said Parsons.