Middlesex approves $3 million line of credit
by Larry S. Chowning
The Middlesex County Board of Supervisors voted Tuesday to authorize the securing of a $3 million line of credit in case there are not enough funds to meet county payrolls between now and when real estate taxes are collected in June.
The line of credit will cost the county $15,000 to cover attorney and bank fees, plus any interest on the amount borrowed.
The county collects real estate taxes twice a year—in June and December. About $5.5 million is generated during each collection, said county administrator Charles Culley. The county also collects personal property taxes in December.
Middlesex spends about $1.9 million a month, said Culley.
The county budget exceeds $20 million annually.
Other revenues coming into the county treasury include sales taxes, state and federal funds, business license and other fees, such as on new construction.
Part of the problem with the cash flow is that funds for state and federal mandated programs must be paid by the county before reimbursement is received. This hurts the county’s cash flow, said Culley.
The policy that was adopted Tuesday requires the county to borrow at least $150,000 and it must be paid back by the end of this fiscal year, which is June 30, 2010. Any use of the line of credit above $150,000 must be approved by supervisors.
Attorney Daniel M. Siegel of Sands Anderson Marks & Miller informed the board that some counties use this method each year to make sure there are always enough funds to cover shortfalls.
Supervisor Carlton Revere praised previous boards for not having to borrow funds in the recent past, but felt the county should not go into April without knowing if there would be enough funds to meet the payroll.
In years past, the county has used reserve funds to offset any shortage in funds. However, in the last few years those reserve funds have dwindled. Supervisors discussed ways to have more reserve funds in the future.
Last month, county treasurer Betty Bray cautioned supervisors that there might not be enough funds in the bank to meet the April payroll.
This almost happened in the fall of 2009, but some people paid their December real estate and personal property taxes early enough to generate the revenue needed to cover expenses.
Culley said because the 2010-11 tax rate must be set and public hearings held on the proposed county budget, it is unlikely this June’s tax bills will be mailed soon enough to generate “enough money to offset the problem.”
The four members of the board present at Tuesday’s meeting voted in favor of setting up a line of credit. Board chairman Jack Miller was not present due to illness.
