Co. Forwards $10.8 Million Capital Improvement PlanIssue Date: June 19, 2013
After close to an hour of discussion and debate on the countys future direction concerning finances and capital improvements at their Monday, June 17 meeting, the Marinette County Finance and Insurance Committee forwarded two substantial recommendations to the County Board meeting.
The first recommendation was to approve a $10.8 million Capital Improvement Plan for calendar year 2014. The second recommendation was for the County Board to fund the massive Capital Improvement Plan (CIP), the funding for which could come from bonding, borrowing or divesting of county investments.
As a matter of administrative policy, for the second year in a row County Administrator Ellen Sorensen requested every division of county government to submit their Capital Improvement needs so that the County Board can have a vision of the countys five-year outlook in this area.
County Board Chairman Vilas Schroeder explained that for too long the County Board has been reactive when it comes to capital projects, preferring to wait for a crisis and then figuring out to finance it. By developing a 5-Year CIP plan, the county can become plan for things by being more proactive.
Sorensen added that this a major shift in how the county has traditionally transacted business. Each County division contemplated their needs for the next years and submitted their proposals to the Finance Committee. This meeting is the first glimpse of the entire CIP requests for 2014.
Here are the requests included for next year:
Emergency Manage-ment$140,200 for a countywide (building) security and surveillance camera system.
Facilities/Maintenance$275,000 for work on the Niagara Sr. Center ($75,000) and two projects at the UW-Marinette Campus ($100,000 each for the Library Roof and Replacement of the Lift Station).
Finance - $500,000 for new Financial Software.
Forestry$103,000 to replace the 1990 35 ton lowboy equipment trailer.
Highways$8,973,000, broken down as $3.5 million for the CTH B project, $1.065 for CTH C from CTH %F to the county line, $1.68 million for CTH C from Perch Lake Road to Wausaukee, $149,000 for CTH DD reconditioning, $80,000 for engineering work on CTRH G from CTH E to Spur Road, $175,000 for CTH R for the mine road, $1.469 million for CTH V from CTH C to Amberg, $100,000 for upgrading the fuel islands at all three highway shops, and $755,000 for equipment purchases.
Information Services$265,000, including $85,000 for network infrastructure and $180,000 for new Register of Deeds software.
Law Enforcement $503,000, including $277,000 for a new storage building for LEC Equipment, $140,000 for patrol cars, $56,000 for an investigator vehicle, and $30,000 for the changeover packages for the above vehicles.
Parks$75,000, including $25,000 to replace the 2006 GMC Pickup and $50,000 to replace two lawnmowers.
County Finance Director Pat Kass broke down the funding sources for the entire $10,834,200 price tag. Some of the items can be paid for through the sales tax, restricted funds, grants/aids, fund balances and other sources. Kass computed that $9,435,200 of the above amount would need to be added to the countys debt in some way, shape or form.
The Committee spent a great deal of time examining the requests from the Highway Department, especially the $3.5 million price tag on CTH BB. While acknowledging that the price tag is justified, some supervisors seemed to want to debate whether or not the County should design the roadway to state and federal minimum standards for rural county highway construction or should the County acquiesce to the demands of some CTH BB residents who want the design to be well below those minimum standards.
At first, the Committee toyed with the idea of merely passing on the CIP and the funding question to the County Board without recommendation, but Schroder nixed that idea because he envisioned the full County Board debating the issue for at least three full days.
Eventually, the Committee decided to approve the CIP Plan and forward it to the County Board as presented citing that that the CIP is just a planning document that identifies need.
The debate then turned to options for financing the plan.
Bonding or borrowing would have a direct impact on taxes paid by county landowners. Kass explained that if county were to bond $9 million for 2014, current rates indicate that property taxes would rise about 17 cents per thousand dollars of value. For a $100,000 home, that would mean an additional $17 in taxes.
The Committee asked about bonding/borrowing for the entire 5-year plan, which totaled $52.7 million. Kass explained that any bond issue would have arbitrage issues connected to it, which basically mean that the money could not be held for that long. He suggested that if the County were to borrow, that it do so a year at a time.
Sorensen explained that there is also the option of divesting some of the countys investments, which would result in a lower tax impact. It also would mean the county wouldnt have that money invested anymore. Sorensen also explained that bonding is for capital projects only, and not for things like computer hardware that would wear out or be obsolete well before the bond gets paid off.
When taking into consideration items eyed in the CIP specifically for debt service, the actual total is just over $27 million.
When asked how much of the Countys investments could be diverted to capital improvements, Kass answered, after a very detail explanation, that about $21.4 million was available.
Of course with current interest rates so low, borrowing right now would mean a lower interest rate. Correspondingly, rates of return on County investments are also currently quite low. However, the direction these rates will take in the future is not known. Borrowing or bonding in the years ahead could mean a higher rate. Divesting investments right now could also mean giving up the income from possibly higher rates in the future.
Sorensen added that the County could also just go the bonding route for highway projects, which would allow some freeing up of operational fund for areas that have been neglected for a number of years.
In the end the Committee approved recommending to the County Board fund per preliminary funding analysis of the Five Year Capital Improvement Plan (CIP) for 2014 as presented.
In preparation for the County Board meeting, the Committee asked that all of the different numbers that could apply to the various scenarios of bonding, borrowing and using current investments be available for the discussion.
Sorensen reiterated that she needed to know which direction the County would like to take by the end of June so that she can move forward with the appropriate budget process.
In other matters, the Committee approved the yearly Budget Policy letter. The 2014 letter, which contains basically the same information on budget guidelines and policies of the County as previous years, indicates that the County may have seen a 1 percent new construction growth in equalized value, thus meaning the tax levy would be allowed to increase $148,920 for next year.
To fund known deficits in the carryover from the 2012 budget into the 2013 budget for the Highway Department, the Finance Committee approved using $762,000 from the Unassigned General Fund. This is the same fund tapped at the last County Board meeting to fund the video conference equipment purchases.
The agenda item cited $444,000 for construction, $153,700 for 2013 year-to-date snow removal, up to $100,000 for possible CTH BB tree removal and utility adjustments that will be done this year, and $65,000 for drainage improvements for the CTH W/Parkway Road intersection.
Funding was also approved to fund in an amount not to exceed $15,000 for Phillips Borowki, S.C., to pursue legal action related to Marinette County Case 2012CV000374. The funding will come from the regular county 2013 contingency fund.
Information Services Director Larry Schultz was invited to the meeting to discuss the ongoing beta testing of I-Pads by the Finance Committee. Having learned from her experience with the device, Supervisor Connie Seefeldt asked that new I-Pad users be given more enhanced training. Schultz added that the next eight I-Pads, for expansion of the program, have been ordered. He would work in more training when they do arrive and are implemented. An update was also given on the video projects taking place in the County Board room.
After Committee review, no changes were made to the Countys Investment Policy. Seefeldt asked how the Corporate Bonds were performing, since she had opposed that aspect of the policy when it was implemented last year. Kass replied that he had invested in three corporate bonds, and that they are doing fine.
In his monthly directors report, Kass pointed out that investment interest continues to meander slightly, with no major discernible trend developing. He did speak about the impact of recent usage of money that was located in the Unassigned General Fund. The fund had been slowly built up $3.4 million over several years. Recent spending of money in that account will take years to replace.
No appropriation entries were presented to the Committee this month.
The Committee reviewed the monthly Schedule of Invoices, which totaled $192,966.62. $116,071.50 of that amount was for the General and Automobile Liability Insurance for the County.
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