ActivePaper Archive There will be taxes - Burlington Times News, 3/5/2019

There will be taxes

Commissioners see plan for bonds, other spending

GRAHAM — Planning for $189.6 million in bond debt and spending will mean a different approach to county finances and higher taxes.

“We’ve done a lot of work to change how we budget and put all this stuff together in a capital plan,” County Manager Bryan Hagood said Monday, March 4, at the Alamance County Board of Commissioners meeting.

The capital plan for building projects and maintenance would set out the timeline for the school system and community college bond projects as well as projects and maintenance the bonds won’t cover and spending on county buildings, Hagood said, and show lenders and taxpayers the county can manage its debts.

Voters approved $150 million for the Alamance-Burlington School System to build a seventh high school and other school renovation projects, and $39.6 million for upgrades and expansions at Alamance Community College in the Nov. 6 election.

The county would see a 7.04-cent total property tax increase in the next budget under the capital plan, Hagood said, which is less than the 7.88 cents Hagood originally anticipated thanks to some changes in project timelines.

The increase could be cut to 6.29 cents with “structured debt,” Hagood said, putting the biggest principal payments at the end of the loan when there is more money to pay them off because the interest is already paid down. That does mean there is more interest to pay off in the end, and unpaid principal limits how much the county can borrow.

“It could hinder us if we wanted to borrow more money later on,” Hagood said. “But it is an option that is available."

The county could have an 11.04-cent tax increase to pay down the bonds if the commissioners only raises taxes as the debt is issued, what Hagood called a “natural property tax increase.”

Commissioner Tim Sutton said he liked the structured-debt idea and didn’t intend to approve much more than a 6-cent property tax increase.

“There’s a point to where you say, this is all we’re going to do,” Sutton said. “And I’m not sure we had that philosophy going into this.”

“This is as good as it gets for doing everything that’s been proposed at the lowest rate possible,” Hagood said.

Commissioner Eddie Boswell asked if it wouldn’t raise more tax revenue if the county did property revaluations every four years instead of every eight years to take advantage of the county’s rapid growth. The question is whether it would bring in enough to make it worth the cost of additional revaluations.

The heart of the capital plan is keeping debt payments steady even as debt is paid off expecting that the county, college and schools will need to borrow money again in the future. It basically would mean almost having a separate budget for building projects, maintenance and debt payments and one for the operations of county government.

“This is probably not going to be the last bond project we will see,” Hagood said. “There are always going to be more capital needs.”

ABSS plan

The biggest part of the property tax increase would be for the school system.

A 5.64-cent property tax increase in the next budget would “keep all the [bond] projects in line and on time,” Hagood said.

That additional tax revenue would also provide ABSS $3.3 million every year for capital projects not covered by the bonds.

“They have capital needs beyond the bond projects,” Hagood said. “We would be working with the school system on a seven year time period to determine what that $3.3 million would be spent on.”

Keeping capital spending steady as debt is paid off would also let ABSS build some savings for capital needs, Hagood said, though those reserves would not be substantial until 2025.

“As they pay down their debt we leave the dollars that we’re paying in the plan,” Hagood said. “If we pay down some of their debt, we don’t reallocate that into operating.”

The plan would use ABSS’s reserves as well as lottery and sales tax money and capital funds that will be freed up as the district pays off some older debt to pay down the bonds, Hagood said. Sales tax and lottery revenues can rise and fall with the economy, so Hagood said he low-balled how much they would bring in to avoid shortfalls.

The commissioners could also put the quarter-cent sales tax increase that voters turned down in November on the ballot again in 2020, which could bring in $4.8 million per year, which is what a 3.62-cent property tax increase would bring in.

The state Legislature could also pass statewide school capital bonds from which, according to one proposal, Alamance County could get about $24 million.

Hagood said the county will likely need a committee to oversee the technical side and an oversight board to monitor how all that money is being spent, which the commissioners appreciated.

“I think that’s a terrific idea,” said Board Chair Amy Galey.

Her support for the plan, she said, depended on good communication and planning among the county, ABSS and ACC.

ACC’s piece of the

capital plan

1.4 cents would be the community college’s share of the tax increase.

Aside from the bond projects, the college has close to $2.8 million in work it hopes to have done over the next seven years, so it also won’t begin to build a reserve for capital projects until the 2025-26 budget.

“The big take away from the community college is all bond projects would be able to be done in the time lines that they have given us, and the tax increase that would need to happen is 1.4 cents,” Hagood said.

County facilities

No property tax is needed for county government building maintenance, Hagood said, but there is work to do, and Hagood anticipates borrowing to get it done.

If the county keeps its capital funding steady, it could borrow $5 million in 2020 without a tax increase.

“That’s very important,” Hagood said. “We have a lot of deferred maintenance.”

The county could be eligible to borrow another $15 million between 2022 and 2025 to implement a county facility plan that Hagood said should be ready by April. That would be installment debt, not bond debt, so the commissioners wouldn’t need voters’ approval.

Budget timeline

April 1: ABSS and ACC

will make their budget


April 15: commissioners’

budget retreat.

May 6: manager’s recommended budget presentation. May 20: budget public hearing.

Reporter Isaac Groves can

be reached at igroves@ or 336-506-3045. Follow him on

Twitter at @tnigroves.