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Agenda Package - 09-21-09
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Agenda Package - 09-21-09
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10/29/2009 10:25:34 AM
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Committee
Board of Commissioners
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GC, 0 <br />• LEE COUNTY <br />Coimnritted Today for a Better Tomorrow <br />MEMORANDUM <br />TO Chairman Richard Hayes <br />Vice Chairman Larry "Doc" Oldham <br />Commissioner Robert Reives <br />Commissioner Ed Paschal <br />Commissioner Jamie Kelly <br />Commissioner Linda Shook <br />Commissioner Amy Dalrymple <br />FROM John Crumpton, County Manager <br />RE: Debt Capacity/Quarter Cent Sales Tax <br />• DATE August 12, 2009 <br />There have been a lot of questions about our debt capacity and other financial matters related to the <br />vote at the last Commissioner's meeting to hold the % cent sales tax referendum and begin <br />construction and repairs at the Lee County High School Campus. Lisa Minter and I have been <br />reviewing our budget, revenue forecasts and financial models since that meeting. With the passage of <br />the State's new budget, I need to communicate to you the County's new debt capacity and the impact <br />of recent decisions on that capacity. <br />First, l would like to remind everyone that over the last two budget preparation cycles, the main focus of <br />the budget was not to raise property taxes. Knowing that the most important issue was to keep the <br />property tax rate at .75 cents, I made several adjustments to the amount of the property tax revenues <br />that went to debt service/capacity Under our financial policies, we use both the property taxes in a <br />current year and the Capital Reserve Fund to fund our debt service. On an annual basis, we contribute <br />1 percent of the total budget to capital reserve- As needed, so that we don't have to raise taxes, we <br />transfer funds from the capital reserve to help fund debt service. In fiscal year 2006-07, the County <br />contributed 9.5 cents of the .75 cents tax rate to debt service. Over the next two budgets, this amount <br />dropped to 7.9 cents The 9.5 cents actually exceeded the required debt service payments. The <br />amount over the debt service went to the capital reserve fund- The effect is that we are contributing <br />less to the capital reserve fund and therefore we have fewer funds to start new debt service on new <br />projects This 1.6 cent reduction lowered our contribution to debt service and capital reserve by <br />$670,000 per year. While this reduction dropped our debt capacity by an estimated $8 million, it saved <br />12 to 15 jobs during the recent budget process. <br />It is important to remember these decisions had been made after the % cent sales tax referendum was <br />defeated in 2007 and the fact that it was decided not to renovate Lee County High School at that time <br />
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