Although it hopes not to have to use it, the Carroll County Board of Supervisors unanimously passed a resolution Aug. 8 to authorize the issuance of up to $2 million for a revenue anticipation note.
The county passed the resolution authorizing the revenue anticipation note after a lengthy finance update from Interim County Administrator Nikki Cannon. Cannon said the county generally does debt service payments in June and July. This year, a lot of one-time payments came out in July.
“In July, August and September we typically need $6 million to $7 million to get us to the point where we start collecting taxes. That is when we seem to increase, typically in October when the tide starts changing for cash flow,” Cannon said. “The Commissioner of Revenue doesn’t have to have (tax tickets) to the treasurer until 90 days after the levy set, which is not due until Sept. 27 this year. There also have had some legislative changes that may come into play, so the book might be a little later this year and cash may start coming in later. It’s not an unusual scenario for us. We have always had the cash reserves in the bank to cover those shortfalls. We have run into a situation now where it is not necessarily like that.”
Cannon then highlighted some financial figures showing the county’s cumulative cash flow – revenue minus expenditures. She said Carroll County had a shortfall of about $4 million in 2014, but the county did purchase some large pieces of property that year to work on economic development to bring jobs to the community. The cash effect over the past seven years has been minus $1.7 million, she said. While the cumulative cash flow was approximately $2.1 million each in the general fund for Fiscal Years 2009-2011, it dipped to $293,541 in 2012. Since that time the county has been in the red, with negative cumulate cash flows of $1,344,614 in 2013, $3,556,609 in 2014, $1,124,045 in 2015 and $2,430,375 in 2016).
“We are going in a direction to control costs and trying to end the year like we did in 2009, which I think was the last tax revenue anticipation note the county had until maybe now,” Cannon said.
Cannon said some of those measures included a deposit of $670,311 for the revenue collected by the Public Service Authority on natural gas billings. It was left in the PSA because it earns $1,000 interest a month that way. She said Carroll will also see an additional $10,000 from the gas purchase agreement when the natural gas line will be paid to the Industrial Development Authority (IDA). The county, in turn, will bill the IDA $10,000.
“Next month you will see a negative $27,000, which was the county investment in the gas line that what we received. We are working hard to get that number down to zero,” she said. “We will also bill them for an additional $17,700 when the sale goes through.”
A Laurel Fork Fire Department truck that is budgeted for $375,000 in the current budget may be averaged into six months of debt service instead of being bought outright, Cannon said.
“If we do that, that will save $353,000 out of this year’s budget we don’t have to spend outright. Do we want to use that right now? That’s never my preference to fund these things because we will have to replace capital and if you are financing it you get behind the eight ball,” Cannon said. “In this situation I think we are okay to do that right now.”
An incentive of $200,000 to Vanguard in the Carroll County Industrial Park was budgeted into the current county budget, but Cannon said it will actually be funded by the Carroll IDA. Additionally, she said the Carroll County Cannery is currently closed due to a boiler issue that will cost the county $32,000. Only $19,500 was originally budgeted for that.
“It is going to be shifted and the remainder of that will be funded out of the maintenance budget. We will go without something in the maintenance budget so the impact will be zero. We did have a reduction in the airport. They paid a debt service out of an account that will save us $8,000. It may not sound like much but all of these things add up over time,” Cannon said. “We have personnel savings from July and August alone that can add up over time.”
She said the total reduction in expenditures right now is almost $603,000. The county also increased the tax levy this year, which should bring in an additional $400,000. She hopes to hear from the State Corporation Commission in September on the figure Carroll can tax on its gas line. Right now, she said wouldn’t want to speculate on that number. She also can’t quantify how much may be collected in delinquent taxes this year, but she is hoping for a great collection effort.
Other options to increase cash reserves in Fiscal Year 2017 include continuing to take advantage of “incredible results” through govdeals.com on surplus items and a continued reduction of operating costs. For instance, she said the county just saved $5,000 alone on cell phone fees. Other options include a concerted effort of delinquent tax collections in the treasurer’s office, including budgeting $10,000 for Department of Motor Vehicle stops for the collection of personal property taxes. Other options include the sale of real estate property, as she noted the county has gone through two tax sales, a very successful way to get delinquent taxes paid. Other options include the consideration of utilizing a collection agency, implementation of mandatory direct deposit, implementation of a new phone system, reassessment notices predicted to go out in October, and implementation of new software at Carroll County Fire & Rescue for more efficient scheduling of part-time help.
“Our feeling is we need to have it in place for peace of mind. But we are hopeful we won’t have to use it and we won’t use it if we don’t have to,” Cannon said of the revenue anticipation note. “If all the stars line up correctly we won’t need it.”
Allen Worrell can be reaached at (276) 779-4062 or on Twitter@AWorrellTCN