After multiple meetings and comments, the Brown County Council approved an ordinance last week allowing the county to take out a $3 million bond to pay for various projects and road work over the next three years.

The anticipated impact on tax rates for residents is expected to be minimal to none, but the exact impact will not be known until the bond is finalized next month.

The borrowing was approved on a 5-2 vote with council members Darren Byrd and Scott Rudd voting no.

The county has been borrowing $2 million every two or three years for capital improvement projects. The last such loan they took out in 2018 was to be paid off this summer.

Multiple projects have been discussed that could be funded with the bond, including buying the Career Resource Center of Brown County building from the school district and turning it into the prosecutor’s office, which would replace the current office that sits in the courthouse parking lot. That move is dependent on the school board and superintendent agreeing to the sale and is estimated at $500,000.

Paying off the rest of the Columbus Regional Health ambulance contract which was severed in April when the county contracted with IU Health, estimated at $281,000, is also on the list of projects.

Paying off 911 system equipment which has already been purchased and installed, for $360,000, and possibly replacing about half of the 11 air conditioning units at the jail, estimated at $250,000, are also on the project list.

Money also will be set aside for the highway department to do road and bridge work. It will be used to supplement capital expenses in the highway department, like buying culverts, which would free up the regular operating budget to pave more miles, county commissioner Diana Biddle explained.

Plans for the money are subject to change as the county receives nearly $3 million from the American Rescue Plan Act (ARPA), split into two payments, and restrictions on how that money can be spent continue to change at the federal level.

During the meeting, council committed to being transparent about how the bond money will be spent by announcing changes to spending plans in public meetings.

In addition, the council voted unanimously to reaffirm a loan resolution which was originally approved in June since it was not originally on the June meeting agenda “in order to demonstrate a commitment to transparency,” said council President Dave Redding. That resolution allowed them to go forward in figuring out the details for the bond.

This vote on the loan came before the first night of county budget hearings, at which the council was challenged with the task of cutting more than $1.4 million from budget requests for the county budget to be fundable in 2022. Budget work will continue over the next month.

Public questions

About seven residents questioned borrowing $3 million.

Resident Sherrie Mitchell asked if money was available in the county’s investment accounts the treasurer manages. The county has approximately $6.8 million in three investment accounts.

The county also has an operating account with Peoples State Bank that has around $3.9 million in it and a Fifth Third account with approximately $5.3 million.

The ordinance for the loan states that the county has “insufficient funds” to cover the costs of the project. Mitchell said disagreed with that statement.

“You know you’ve been given a lot of money for COVID this year. You know who didn’t get COVID money was the citizens of this county, so they suffered too and have losses too, just like you did, so if we could give them a tax break even for a year, because you don’t really need this money right now,” she said.

Mitchell suggested the county pull money from the balances in the various funds to cover projects a little at a time.

Last week, Treasurer Andy Bond said her job “is to invest our county money to the best of my ability and stay within state guidelines while doing so.”

“Unfortunately, the rates at this time are very low, so investment banks are not bringing in the interest as they have in years past,” she said.

Years ago, the county did not collect taxes as normal, and two years’ worth was collected in one calendar year. “During that time of not collecting taxes, our county government kept running. Our county council doesn’t approve county budgets to expend all the money that the county has for reasons just like that,” she said.

Redding said he would like to get a financial report from the treasurer’s office on all the fund balances.

Resident Kevin Fleming cautioned the county council against thinking of the bond money as a “line of credit” with the possible projects it could fund.

“It leaves an impression that there’s a lack of financial due diligence, like there’s not a really tight grip on operational expenses. Whereas a capital project is something that you don’t expect to have every year, therefore it’s normally more involved and more expensive, so you likely borrow money for it,” he said.

“It also brings up the question, are you budgeting enough? Are you budgeting everything?”

During the meeting the council approved moving $250,000 of unbudgeted money from the general fund to the county’s health trust fund to help cover bills. It was said that more money would most likely be needed by the end of the year for those bills.

Another $35,000 was approved from unbudgeted general fund money for a wellness incentive for county employees. Employees can receive $200 if they get a physical exam and their teeth and vision checked. The hope is that will ultimately cut down on health insurance costs as health problems are caught earlier.

Health insurance is one area the county commissioners and human resources will be focusing on to see where costs can be cut, HR Coordinator Melissa Stinson said. Biddle added that if too many cuts and changes are made to the county’s health insurance plan, that could make reinsurance costs “skyrocket.”

Redding said he agreed with Fleming that the bond money should not be used under a “line of credit” mentality.

“Shame on us for borrowing money for operational expenses. That is unsustainable,” he said.

In the same realm of budgeting accurately, Rudd again said that a capital improvement plan was needed to better plan for expensive projects, like replacing the air conditioning units at the jail. “We cannot keep waiting on that,” he said.

Biddle said she was going to have a company come to show the council what plan they could put together.

“I would consider it extremely urgent,” Rudd said.

Biddle said she has money that could help cover the cost of that plan, estimated at $30,000 to $60,000.

Rudd and council member Judy Swift Powdrill also encouraged the commissioners and other departments to budget accurately by using projected revenue and expenses based on the year prior, instead of underbudgeting and then having to come ask for additional appropriations, which eats away at cash balances.

Tax-neutral?

The county tax rate was 0.0979 in 2020, 0.0797 in 2021, and is estimated to be 0.0969 in 2022 with the loan factored in, said Kaitlin Cheek, who works for the county’s financial adviser, Baker Tilly, at the Aug. 9 meeting.

Biddle said the impact of this loan would be less than a penny on $100,000 of assessed value.

“It is still an increase,” Byrd said. He added that the school district was also taking out an $8 million loan for capital projects.

The schools’ bond will not affect the district’s debt service tax rate, which means Brown County taxpayers should not see any increase to their property taxes, the school district’s financial advisers have said.

Byrd asked it was possible to adjust the amount to be borrowed to ensure taxpayers would see no increase. “I consider my word to be important, and if we’re raising taxes, then I’ve broken my word,” he said.

At the June meeting when the first bond resolution was approved, Rudd’s motion stated that the council was not considering raising taxes, “but would like to move this resolution forward.”

Biddle said that lowering the amount borrowed to make it tax-neutral would not help much, since the county would still have to pay more fees to have its financial advisers and attorneys make changes to docouments. “Those changes will eat up whatever you think you’re going to be saving,” Biddle said.

Redding asked what would happen if the county receives the $3 million and a balance is left at the end of the term with no project to fund.

Biddle said another half-million dollars would still need to be spent at the jail to replace the remaining air conditioning units, and there are multiple bridge repairs to fund.

“There’s probably another $2 to $4 million worth of other projects in the county,” she said. “Elkinsville Bridge takes care of a couple million dollars of it.”

Council Vice President Dave Critser said that if borrowing the money raises taxes a penny, then “it raises their taxes a penny. I’m sorry.”

“I have run (for office) multiple times. The question always came up, ‘Would you raise our taxes?’ I said, ‘If it’s necessary, yes,'” he said.

Biddle added that borrowing this money was “as close to neutral as we can get” and that the exact impact will not be known until the bonds are sold.