County to borrow money to pay billsPublished 1:26pm Saturday, September 22, 2012
COURTLAND—For the first time since 2001, Southampton County officials will ask a bank for a line of credit of up to $3 million to pay its bills.
Assuming the entire amount would be borrowed and paid off within 90 days, the interest would be $9,675.
“”You’d never draw all that down,” said County Administrator Mike Johnson.
County Treasurer David Britt on Sept. 13 informed Johnson that cash flow will likely be insufficient to cover anticipated expenses for September, October and perhaps November.
“We only collect revenue (taxes) once a year and many (municipalities) collect them twice a year,” Johnson said. “It’s always close in September, October and November.”
Bills for real estate taxes were mailed last month, while personal property tax bills will go out in October, he said. All taxes due on Dec. 5 will generate $18.5 million for the county’s $54 million budget.
Franklin District Supervisor Barry Porter said he would support the line of credit.
“I think that we have to pay our bills,” Porter said. “The problem has been that our reserve has gotten so low and that we don’t have access to funds. We collect our taxes in December. You have to go pay the bills all throughout the year.”
“We are working long term to try and prevent this in the future,” he added.
Newsoms District Supervisor Glenn Updike said he doesn’t like borrowing the money, but it’s the lesser of two evils — either pay the bills or default on them.
“Our hands are tied,” Updike said. “We don’t have any other choice. This is after the fact. If we default, it would hurt our credit ratings. To me, it is evidence that we have to get spending under control.”
Law allows localities to borrow money in anticipation of collecting taxes as long as the loan does not exceed expected revenues.
Britt sought proposals from three banks. SunTrust offered the best rate. The county can make two draws a month, but will have to pay a $6,000 up-front fee to the bank.