County requests $6 million loan as security blanket
Bobby Summers The Orange Leader
A $4 million revenue shortfall has forced Orange County leaders to request a $6 million short-term loan to make sure the county will be able to pay its bills through the end of 2012.
Before county commissioners voted at their regular Monday meeting to approve the County Tax and Revenue Anticipation Notes loan application, County Judge Carl Thibodeaux explained that the shortfall was the result of a number of factors that occurred over the past two to three years, including the long-term effects of two major hurricanes and several expensive capital improvement projects.
“We didn't realize this situation existed until a short time ago,” he said.
Thibodeaux said he and the county treasurer went over all the numbers and found the county could be facing a cash-flow problem in the final quarter of 2012.
“That would mean we might not be able to pay all of the county's on-going bills through Dec. 31, and we will be facing some big bills between now and the end of the year. We can't tell our creditors that we can't pay them now, but will pay them in January,” he said. “The county will take in nearly 90 percent of its tax revenue during the first months of 2013, and it has plenty of money in the bank now. But that won't help us now.”
The county also is waiting for Hurricane Ike recovery money, but Thibodeaux does not know when those funds will arrive.
After recognizing the potential situation, Thibodeaux contacted Wells Fargo Bank, which handles the county's banking.
“This a loan against our projected tax revenue. The bank immediately sent me all the paperwork and explanation of how the loan would work,” he said. “We will pay 3.99 percent interest, which would total approximately $85,000 through the end of March 2013.”
The offices of the State Attorney General and State Comptroller both must approve the county's application before the loan can be approved.
“They will review all of the county's finances and how we manage our budget before they okay our request,” he said.
Thibodeaux said county leaders must begin to address this issue with austerity measures in the coming year to prevent it from happening again.
“My office reviews all purchase orders right now. Some departments may have to hold off buying things until January,” he said. “We also will look to get the fund balance up so this won't happen again.”
Thibodeaux said the county most likely will not need all of the $6 million.
“I'm looking at maybe $2 million at the most,” he said.