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Debt restructuring to free up county money

A two-part plan to restructure the county’s debt could halve the $4.25 million general fund deficit by freeing up needed cash flow.
The Budget Committee reconvened Monday morning from its recessed monthly meeting last week and voted to recommend the plan to the full commission.
The proposed plan includes the restructuring of $7.3 million in capital outlay notes and $2.85 million of the 2004 school bonds into a 12-year note at a 3.08 percent fixed rate.
“From the standpoint of getting it done at competitive rates, we are good on that,” Mayor Dan Eldridge said.
While the cost will be $526,000 over the 12 years, the restructuring will free up $850,000 in annual cash flow.
The second part of the plan includes paying off four capital outlay notes totaling $3.1 million from the debt service balance, which will free up an additional $1.2 million.
“The general fund budget is $4.25 million out of balance, but restructuring and paying down the debt will give $2.1 million to the general fund,” Eldridge said. “This cuts our deficit in half.”
The goal of the restructuring and debt reduction is to help balance the budget during the current fiscal year and the upcoming two years, Eldridge said.
“A lot of different sources say not to expect revenue increases until 2014,” he said. “It is prudent for us to be completely focused on what it will take to balance the revenue and expenses.”
County CPA and Accountant Charles Steagall agreed with the plan.
“If we don’t shift funds [from the debt service balance], we will have to look for additional sources of revenue or cut expenses,” he said.
However, shifting the excess debt fund balance to retire more than $3 million in debt and provide cash to the general fund will reduce the debt service reserve to the minimum 40 percent advised by the County Technical Assistance Service.
“The cash flow in the current budget is the issue at hand,” said Commissioner Mark Larkey, making a motion to recommend the resolution for restructuring to the full commission at its May 23 meeting.