Minutes 06-11-19 Budget Work Session

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8 Commissioner McKee said he just wants to be clear that this is not a savings, but a delay of expenses, which offsets in year 1 the additional CIP spending. Travis Myren said there is some infusion of cash from amendment#10. Commissioner Price referred to the bottom figure on the green sheet, and clarified that this is taking in two different amended proposals on the schools. Travis Myren said those two proposals net out to zero, because the County is bringing in as much tax revenue as it is spending. Commissioner Dorosin said suggested starting with amendments 9 and 10 on the green sheet, and whether the Board prefers the Manager's recommended 1.5 cent tax increase or the 4.5 cent tax increase. He said the outcome of these votes go may affect how the Board feels about other amendments. Bonnie Hammersley said amendment# 9 (Increase the Ad valorem tax by 4.30 cents which reflects the Upfront Tax Rate for Debt Service, rather than the Phase-In of 1.50 cents contained in the Manager's Recommended Budget) was option 2 of the recommended budget. She said she recommended the phase in of 1.5 cent, and this second option would do an upfront increasing of taxes to the amount needed throughout the debt to 2021-22, and would create a debt service reserve, into which the money would go. Bonnie Hammersley said amendment#10 is to create the debt service reserve fund (Transfer 4.30 cents Ad Valorem tax proceeds to a Debt Service Reserve Fund) if the BOCC approves amendment#9. Commissioner Dorosin said the options before the Board are 1.5 cents as recommended by the Manager. Bonnie Hammersley said yes, this would be reviewed annually and there would be a phase in of the cost needed to cover debt service. Bonnie Hammersley said option 2 would be to do the 1.5-cent increase, plus pay upfront the future debt service and create a debt service reserves. She said this would raise the tax rate to 5.8 cents (1.5 plus 4.3). Chair Rich said the 4.30 would be in the reserve fund, and be paid through 2022. Bonnie Hammersley said it is a continuum that is paid up front, and is what staff anticipates the need to be through 2021. She said there is not a sunset, and staff is not recommending that this tax rate be stopped. She said the Board that is sitting at that time may choose to stop the tax. Commissioner McKee asked if the "not stopping" part could be clarified. Bonnie Hammersley said the Board would increase taxes in an ongoing manner until the Board changes it. Commissioner McKee asked if there is a reason the 4.30 cents rate would be needed in an ongoing fashion. Bonnie Hammersley said the debt is twenty years, and hits a peak in 20-21. Travis Myren said they peak out at about 44.4 million, and once this peak has been hit, and nothing is changed, then the debt service will start falling off, and the sitting board may choose to reduce the tax rate as the debt is satisfied and paid off. Bonnie Hammersley said they hit the peak at 21-22, and the board sitting at that time can make a decision to keep the rate the same or change it. Commissioner Price asked if this type of vote will be needed every year, on this same debt. Bonnie Hammersley said if the Board chooses to do it up front, it will not have to be done next year, as the up front will be there; but if the Board chooses to phase it in, the sitting Board will always have the option to change it from year to year. She said the upfront format is just an option, and she did not recommend this option because there are uncertainties in place and it may or may not be needed.