County commission to look at debt repayment during budget process
As budget talks begin, Ward County commissioners will be considering whether to supplement the county sales tax with property taxes to pay for construction debt.
County Auditor Devra Smestad told commissioners Tuesday that the sales tax fund will fall short of paying bonds in February 2022 if the current collection rate continues. The commission could create an interest and sinking fund using property tax to ensure money is adequate to pay the debt when it comes due.
Before making a decision, commissioners hope to get information from project manager Adolfson & Peterson regarding borrowed funds unspent on the jail expansion and renovation, which came in under budget. The auditor’s office reports about $870,000 left over based on bills submitted.
The average monthly collection over the past six years of collections has been $567,227, according to the auditor’s office. The county had estimated a monthly average of $611,000 needed to finance the project. Collections had started strong, indicating the project would be paid off before the sales tax expired on Dec. 31, 2022.
Sales tax collections were $329,528 this past April, up from $304,490 a year ago. March collections of $504,588 were up from $426,137 a year ago, but the $622,748 collected in February was down from $696,335 a year earlier. Smestad said fluctuating monthly amounts are influenced not just by economic activity but also by the timing of the state in forwarding certain collections, which can create occasional spikes.
When voters approved the sales tax in November 2012, the tax had been projected to generate $39.3 million over 10 years. The money was to go toward construction of a new county office building, jail improvements and expansion and remodeling the Courthouse. Also, $10 million was to go to roads and other infrastructure.
The county has not borrowed for road construction but has spent about $3 million as collections became available. The money went to projects in Kenmare, Douglas and Burlington.
Commissioner John Fjeldahl said voters were told $10 million would go toward roads so there must be a decision made about the $7 million remaining.
“We have to be clear on what we are paying back here and if we are going to still attempt to borrow that money,” Fjeldahl said.
Voters in a special election in February 2015 also approved a bond issue for $37 million because the original $39.3 million wasn’t going to be adequate to cover building construction costs. The tax was not extended because collections were running well ahead of projections.
With principal and interest on three construction bonds, the county will owe $74.3 million in total.