By NICOLE ANTONUCCI
FONDA -- Montgomery County is currently $27.4 million in debt, a figure officials will have to grapple with as they start to craft a long-term capital project plan mandated by the charter.
The price tag of those projects, and how it will impact the budget remains to be seen.
"We will know more about that when we start going through the budget process," Executive Matt Ossenfort said. "In terms of the big picture, we are in a good spot and we have some flexibility. If some investments had to be made, we are in a position where we could do that if we wanted to."
The county is currently paying $4.3 million a year in principle and interest for outstanding bonds for projects dating back to the early 2000s. While some of that bill is budgeted for, some of it is paid for through taxpayers dollars.
According to the current-year budget passed late last year, the county is paying off six projects with outstanding bond amounts ranging from $805,000 to $6.1 million. One bond is expected to be paid off as soon as 2016, which county Treasurer Shawn Bowerman said was for a capital project at the county jail.
The remaining five bonds aren't expected to be paid off until after 2020. The bonds are for road and bridge projects dating back to the 2000s, along with the 2011 land acquisition for the Florida Park Development.
With more projects coming down the pipeline as early as next year, the debt could go higher.
However, Treasurer Shawn Bowerman said the county is limited as to how much debt it can accrue. Current borrowing stands at 18 percent of the debt limit, he said.
He added that over the past five years, the county has worked to reduce how much is owed. In 2009, the county's debt stood at approximately $45 million.
"We have reduced the amount of debt the county is holding considerably over the last five years," Bowerman said. "Further decreases depends on the county legislature and executive and what they decide to do with any projects."
Ossenfort said it was important that the debt levels stay at a "healthy level" as this impacts the interest rates.
The interest rates on the existing outstanding bonds range from a low of 2.36 percent to a high of 4.93 percent, which represent a change over previous years. Bowerman said in 2013, bonds that had an interest rate of over 5 percent are now 2.5 percent.
"It is a favorable market for bonding," Bowerman said. "We have improved our interest rates over the past five or six years."
He added that there are a couple of factors that impact the interest rate, including the overall economy and the county's bond rating.
The bond rating is determined by the fiscal health of the county, which relates to the county's fund balance.
According to Bowerman, the county's unappropriated fund balance stands at $8.7 million, or 9 percent of the budget. It is up from last year by approximately $800,000.
It would have been higher, but the defunct Board of Supervisors had appropriated $3.9 million to reduce the tax impact, a decision that Bowerman had disagreed with.
"I don't believe it was the right move the board made," he said. "It puts the county behind because it is a situation where the fund balance was not as healthy as it should be."
So far this year, the county has used approximately $450,000 of the $8.7 million. Approximately $280,000 was used for employee salaries and benefits associated with the CSEA contract settlement in March. Another $165,000 was budgeted to the Sheriff's Department for necessary upgrades.
However, Ossenfort said the those funds will be replaced by revenues generated by the Sheriff's Department at the county jail.
There are no state regulations as to how much money needs to be in the fund balance, and opinions vary by official. Bowerman said he would like to see a fund balance between 10 to 15 percent.
"We have a $100 million budget and we are looking at a eight or nine percent fund balance. It's not bad but it's not where we want to be," he said.
The fund balance can be used for a number of items. In the past, the county has relied on those funds to pay for recovery of storm events. While a lot of that money is reimbursed by the Federal Emergency Management Agency, it is up to the county to pay up front.
"It's something you need to have," Bowerman said. "It's there for any unexpected expenses throughout the year."
Ossenfort and Bowerman will provide the legislature with the annual finance update at the county Budget and Finance Committee meeting on June 17.