, Corbin, KY

January 16, 2013

Refinancing Whitley debt loads discussed

The Times-Tribune

CORBIN — By John L. Ross / Staff Writer

A heated discussion concerning refinancing Whitley County’s two biggest debt loads took center stage during the regular meeting of the Whitley County Fiscal Court Tuesday.

During the December meeting of the court, Judge Executive Pat White Jr. said with interest rates so low, it could save the county as much as $1.7 million over the life of the loans if they refinance these debts now. The debt loads involve the old post office and the new county jail.

The court unanimously agreed then to pursue the refinance option.

Tuesday, a second read was slated for the ordinance directing the refinance.

And the discussion began.

The topic was how to apply the savings realized by the refinance. One option offers an annual dollar amount saved to be applied toward projects at the discretion of the court.

The second option cuts three years off the end of the loan life — which is in 2032, 2033 and 2034.

White said he had been approached by members of the community who felt it “was not a wise use of resources to pay off (the debt) early.”

He explained equipment needed by various county departments could be purchased with some of the annual dollar savings, such as a truck for the county road department, or a truck for the fire department. He supported the first option.

“I’ve talked with business people too,” said Jamie Fuson, third district magistrate. “I haven’t had the first one to say that — actually, they favor (the option of dropping three years off the end of the loan).”

Fuson explained choosing the second option means during the last three years of the loan — 2032-2034 — the county would realize $500,000 in savings each year.

Fuson further explained the savings difference between option 1 and option 2 is $1.3 million versus $1.8 million.

White continued to campaign for the first option, saying the annual savings realized with option 1 could be utilized as “a way to alleviate a shortage in funds.”

“The worst-case scenario (is we’ll) have to raise taxes some,” he continued. “We have a serious decrease in revenue.”

He explained several areas of revenue are down in county coffers, saying he would rather realize the savings over a “long term” time frame, “rather than raise taxes.”

Fuson disagreed.

“I don’t think you’ll have to raise taxes,” he countered.

Director of Infrastructure Jimmy Bates was on-hand as well, and explained some of the needs of the road department — needs which could be met with monies saved in the refinance.

“We’re killing ourselves out there,” Bates said, explaining if road crews had to stop to repair broken down trucks or equipment, “you’re paying every time.”

The discussion turned to post-refinance plans. Once the refinance is complete, the county would immediately see $60,000 during the first year.

Bates hopes for new trucks. He explained he’s looked at two types of trucks. The first, he said, is a one-ton four-wheel drive which would cost approximately $62,000. The second truck is diesel, and is a F550, also with four-wheel drive. That truck totals approximately $71,000.

“With new equipment we could get more done with less (time),” Bates said. “I feel very strongly about this.”

Fuson offered that the court could revisit the finance option again in nine years, after the current refinance. However, White felt the decision needed to be finalized now. “Right now (we’re seeing) the lowest (interest rate) level in history,” White said. “The chance of that happening in the next nine years is very small.”

District 4 Magistrate Robbie Brown agreed with Fuson. “If we shorten the burden for folks down the road, it’s a win-win deal for us,” he said, adding county departments should actively pursue savings now. “(We need) to tighten the reins on things to improve cash flow.”

District 2 Magistrate David Myers said the county currently puts more money in personnel than it does in equipment. “What good is putting money in people if you have no equipment to work with?” Myers asked.

He felt he owed Bates the courtesy to see his list of needs. “I feel like (the monies) could be used more judiciously,” Myers said.

He questioned who should better benefit from the savings. “Who deserves it more?” he said. “People (who are) paying now, or 20 years from now?

“We owe it to the people who’ve paid taxes through the years,” he added.

White explained there were revenue decreases all over. “I think the implication is a little unfair,” White said, explaining that despite revenue reduction, “we still managed to pay our bills and not raise taxes.”

Myers expressed concern that if the county gets these added funds, would the fiscal court be in the same position with cash flow concerns as the court is today. “(We should have) done things (that) could’ve kept us from being in this position,” he said. “Maybe (we) should’ve bought equipment over people.”

Fuson again argued for option 2. “We are obligated to take full advantage of the full savings for tax dollars,” he said. “The end factor (is to seek) the most savings.”

White said the savings were “nominal.”

“You can figure it any way you want — it’s still savings,” Fuson said.

White explained the time frame for this refinance is short. The hope is to have things in place by the next regular fiscal court meeting, but White informed the court Tuesday there was a debt hearing required. The hearing will be in Frankfort, he said, and with that requirement, there is a couple extra weeks of time for finalized decisions.

Fuson motioned “to stick with what we did in the last meeting.” He wanted to pursue the second option, and earmark the $60,000 saved to cover the special election bills facing the county.

At first, Myers seconded Fuson’s motion. “If there’s no difference, (I’d like to tell Bates) I’d at least look at what he had to present.”

He also wanted to reserve the right to change their minds.

However, Fuson explained his motion further for Myers’ sake, saying he didn’t think Myers understood.

Myers withdrew his second to that motion. White then offered a motion to not pass the ordinance until the next fiscal court meeting — which brought two competing motions to the floor.

Myers reiterated county departments needed “to do more with less” but that he was “not suggesting layoffs.” He seconded White’s motion.

Fuson’s motion died for lack of a second. The court then voted on White’s motion, which was to “put off” choosing which option to follow.

The vote fell 3-2. Voting for the motion was District 1 Magistrate Roger Wells, Myers and White. Brown and Fuson were against the measure.