The Guilford County Board of Commissioners wasted no time before getting down to business at its 2019 retreat.
By 10:30 a.m. on Monday, Feb. 25, the first day of the two-day retreat, the board unanimously approved a motion to use a financing method known as “two-thirds bonds” to raise $40 million dollars for a host of coming county projects including a new mental health facility, a $10-million investment to enhance school system security, a new animal shelter and a new administrative headquarters for the Guilford County Sheriff’s Department.
The commissioners have been discussing approving the two-thirds bonds for months and at the retreat they were up against a deadline. Guilford County was legally eligible to issue nearly $58 million in two-thirds bonds in the current fiscal year, which ends on June 30 – but county staff had informed the board that, in order to complete the issuance process in time, staff had to have a decision from the commissioners by the end of February – though staff said even that was cutting it very close. With the Feb. 25 vote, the board made it in just under the wire.
Two-thirds bonds are so named because, in any given fiscal year, a local government in North Carolina can borrow up to two-thirds of the money it paid back in the previous fiscal year on its General Obligation bond debt. Unlike General Obligation bonds, no voter approval is required.
Some Republican commissioners on the board have been hesitant to tap into the bonds because the money will have to be paid back starting in about two years and the current Republican board doesn’t want to do anything that will lead to a tax increase. At the meeting, commissioners instructed Guilford County Manager Marty Lawing to begin looking at ways to save in future years that will allow the county to pay that money back without driving the tax rate up.
At the retreat, Republican Commissioner Jeff Phillips made the motion to issue $40 million in two-thirds bonds that was seconded by fellow Republican Commissioner Justin Conrad.
The commissioners still have some leeway as to how the funds will be spent and much what follows will be determined by how much money comes in from other sources. For instance, county officials are hoping a substantial amount in donations can be raised to fund the new Guilford County Animal Shelter and they also hope to see perhaps $10 million in state funds to help pay for a $20-million building to house mental health operations.
At the meeting, Phillips admitted that the $40 million was a round number based on a fairly rough calculation. After some math that took into account expected projects, funds already available, expected funding from other sources and other financial factors, Phillips said that he’s come up with a need of $35.7 million, which he rounded up to $40 million for contingencies.
The commissioners still have some flexibility. They don’t have to issue all $40 million in two-thirds bonds if it turns out that that much isn’t needed, and the board can also come back to the two-thirds bond well in future years the commissioners finding themselves they wish they had gotten more.