Franklin County to borrow $4M short term
MALONE – Franklin County legislators gave the county treasurer and attorney the go-ahead to start the process of borrowing $4 million in the short term and at least $3.5 million long term.
The $4 million is part of the $10 million the county needs to pay its schools and villages to “make them whole,” as county officials often refer to it. Every year, the county covers any unpaid taxes levied by all the villages and school districts within its borders.
The $3.5 million will be a long-term bond for capital projects: $1 million for a natural gas pipeline being brought in from St. Lawrence County and at least $2.5 million for the county Highway Department to complete road projects.
That was the number Highway Superintendent Jon Hutchins gave the board to complete resurfacing and other improvements to county Route 24. But when the board discussed the capital bonding at their Thursday meeting, Legislator Marc “Tim” Lashomb, R-Malone, said he wants the committee in charge of highway issues to take a look at the capital projects and see if there are things that need to be included in the bonding now to make sure the county is set for the long term.
He said just borrowing for one project now might be like putting a Band-Aid on the county’s road situation. Hutchins has been telling legislators for the last few years that they need to start investing in the county’s roads, because funding to his department has been cut too much in the past and he hasn’t been able to maintain them properly.
Legislator Tim Burpoe, D-Saranac Lake, noted that Hutchins provided legislators with a wish list of projects that added up to $9 million in costs. Last week, county Manager Tom Leitz said Hutchins has concerns about several bridges in the county, especially the Main Street bridge in Saranac Lake, which will likely be a seven-figure project.
Lashomb suggested that county Attorney Jonathan Miller and Treasurer Bryon Varin start the paperwork for the tax anticipation note and bonds, and meanwhile the committee will get together next week to go through the county’s road projects and decide what should be included and what shouldn’t. The committee can give Varin and Miller a final number for the long-term bonding after that, he said.
“The process will have already started, so we’re not holding anything up,” Lashomb said.
Other legislators agreed, setting a committee meeting for 9 a.m. Thursday, March 28.
Legislators decided to borrow both the short-term TAN and the long-term bonds at the same time, since rolling the paperwork from both into one offering would reduce expenses.
When legislators spoke with their bond counsel in a conference call last week, Randolph J. Mayer of the firm Fulbright and Jaworski told them the county can probably get between 0.5 and 1.5 percent interest on the TAN. He estimated 3 to 4 percent for a long-term bond, which could add up to about $350,000 for a 10-year bond, but Varin noted this week that interest rates change daily.
“Every day will demand a different rate,” Varin said Thursday. “It depends on when we hit the market.”
The county last borrowed money for cash-flow purposes in 1995 and 1996, Varin said. It borrowed $2.5 million the first year, then $2 million the second year.
Back then, the total budget came in around $41 million, but it has now doubled to about $100 million, Varin said.
Last year, the treasury was holding payments of around $2.5 to 3 million because it didn’t have the cash flow to pay its bills, he said. This year, he doesn’t want to put that kind of burden on the schools and villages.
Legislator Paul Maroun, who is also mayor of the village of Tupper Lake, asked if the county could negotiate with the school districts and villages to maybe give them less money or pay them back later./ Varin said that would likely lead to many of those entities having to do their own borrowing.
“That will only kick the can down the road,” Varin said.
When Maroun asked how the TAN will be paid back, Varin said it’s difficult to know now whether the county will have enough money next year, or if it will have to be rolled into another TAN like he did in the ’90s.
“That will be very hard to predict for you right now, Paul,” Varin told him.
Legislators noted that borrowing money is not ideal, but they don’t have any other options.
“We’ve got to do something,” said Legislator Guy “Tim” Smith, D-Fort Covington. “I’m not all hep on borrowing.”
“None of us are,” Burpoe replied.
Smith said he grew up in an household where if they couldn’t afford the horse, they shot it.
“My hands are folded, but they’re clenched,” Varin said.
Miller said he and Varin planned to get on the phone with bond counsel as soon as legislators wrapped up their meeting Thursday afternoon.