Commissioner Tom Grossmann questioned the need for a 5-year, 0.25 percent sales-tax hike to pay for the jail.
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“I just want to understand it,” Grossmann said after County Treasurer Jim Aumann laid out a plan to self-finance the project through the county treasury.
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Commissioners Shannon Jones and Dave Young seemed ready to approve the self-funding plan secured by the sales-tax increase, mostly paid by people from outside Warren County.
The sales tax would be increased from 6.75 percent to 7 percent for five years, raising about $10 million a year, according to county calculations. The rate would be returned to the previous rate, once the jail debt has been paid off, according to the plan.
The county figures to benefit by carrying the debt itself, rather than turning to the private market.
The county would be paid the interest, rather than a lender, and would avoid costly fees charged when borrowing on the commercial market.
“We pay interest to ourselves,” Young said.
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In addition, this plan could also give the county a better chance of winning voter approval for a property tax hike being considered to fund children’s services.
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Next Tuesday, Aumann and Auditor Matt Nolan are expected to present an explanation of why the county needs to raise taxes to pay for the project.
The project could be self-funded through a portion of about $100 million in reserve funds in the county treasury.
But some of this money is dedicated to other projects or relied upon to meet payroll or other expenses before tax revenues come in to cover them.
“It’s not like the rainy-day fund at the state,” Nolan said via a conference call set up after Grossmann persisted with his questions. “I don’t think there’s another way to fund this jail.”
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In order to self-fund the project without raising taxes, the county could pay for the project through the general fund, but would have to cut $7.5 million from the annual $70 million county budget, County Administrator Tiffany Zindel said.
This also would prevent the county from devoting more money to growing needs or other projects, Zindel added.
Such a move would require deep, across-the board, cuts or elimination of existing county services or departments.
Most of the county’s sales tax comes from people living outside the county, visiting area attractions or buying cars at auto dealerships.
“Probably this is the least impactful on our residents,” Grossmann said.
Grossmann wondered: why not use $50 million of the $100 million in the county treasury to pay for the jail?
While opposed to this idea, Aumann said he wanted to minimize the amount to be taken from the county treasury by timing the self-funding to five-year, $10 million notes issued in anticipation of the “draw schedule” for when money is needed to pay for the project.
If the county needed the additional cash on hand, it could sell the notes to commercial lenders, he said.
The county has financed less expensive projects over shorter periods, Aumann, but the risk and “opportunity costs” grow as the amount and time the money is tied up grow.
Aumann said the county needs to keep enough money on hand to pay for expenses, while investing the rest.
“I can invest all the money in the county, but I can’t borrow a nickle,” Aumann said.
Unmatch coverage
This newspaper has covered the debate over the need for more jail space in Warren County for decades, beginning with debates over whether or not to “double-bunk” two inmates in cells. We will continue to follow the debate over how much to spend on the jail and how to pay for it.
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