Pick a number.
Pick one between 0 and 57 million.
That’s the task the Guilford County Commissioners will face at a critical Thursday, Feb. 7 afternoon work session in which the commissioners will begin to decide how many millions of dollars – between $0 and $57 million – that they will add to the county’s debt to help fund some major projects.
Guilford County Commissioner Jeff Phillips said that, while the board needs to make a decision fairly quickly, it could leave the work session this week without arriving at a hard and fast number.
“We’re not likely to come to a conclusion,” Phillips said of this week’s talks.
The county commissioners are expected to tap into a line of funding known as “two-thirds bonds” to help fund up to four projects: a new animal shelter, a new Emergency Services vehicle maintenance center, a new mental health center and a new administrative headquarters for the Guilford County Sheriff’s Department.
Two-thirds bonds are attractive to some county officials because the money can be borrowed without voter approval. The name “two-thirds” bonds comes from the fact that, in any given fiscal year, a local government in North Carolina can borrow up to two-thirds of the bond debt it paid off in the previous fiscal year. For this fiscal year, which ends June 30, that means Guilford County has $57 million and change it can borrow to pay for projects.
It is a use it or lose it type of financing: If county officials want to issue two-thirds bonds – and boy do some of them want to – then they have to do it in the next few months. Logistically, the window for issuing two-thirds bonds this fiscal year is closing fast and there are still a lot of questions in the air as to the best way to fund the projects.
While two-thirds bonds are easy to do – there’s no public referendum and the move almost always goes unreported by most media outlets – the method of borrowing does have something of a pay-day loan feel to it because the county is paying down debt and then turning right around and borrowing that money again.
The current nine-member Board of Commissioners – led by five Republicans – has been proud of the way it’s been paying down the debt since the Republicans won a majority of the seats on the board in 2012.
That new Republican board has never raised taxes – and it seems staunchly committed to never doing so. That’s good for taxpayers, however, when the tax base is growing slowly, there’s not much new money coming in each year.
Chairman of the Guilford County Board of Commissioners Alan Branson said this week that it’s increasingly difficult to fund the multimillion-dollar capital projects at a time when construction costs are skyrocketing and the tax base is growing at an anemic 2 percent annually.
Branson said other counties in the state and across the country with faster growth can bear the cost of a lot of new projects without a need to raise taxes.
Like Branson, Phillips cited increasing construction costs as a real challenge over the past year. He cited, for instance, how widely staff’s cost estimates missed the mark on a new administrative headquarters for the Sheriff’s Department – a project the board was told early last year would cost $8.5 million. At that time, the money was going to be used to renovate the old jail and let it serve as the new headquarters. Then the commissioners found out it would actually cost $17 million –double the initial estimate. That put the cost at nearly the same cost of constructing a new building and now the board is looking at possibly paying more than $20 million for a new Sheriff’s Department headquarters.
Phillips was asked if he was still prepared to back the project.
“I’m prepared to approve $8.5 million for it,” Phillips said – citing humorously the number that was presented to the board as an estimated cost less than a year ago but a number that’s now a distant pipedream.
