Big Borrowing Decision

From a fiscally responsible viewpoint, borrowing is something we need to be cautious about, but something we may sometimes need to do.  In our personal lives, most of us would not own a house or car because without borrowing money.  On the other hand, a minimum wage worker should not be borrowing money for a $300,000 house and a Cadillac Escalade while owing $30,000 in credit card debt and $60,000 in student loan debt.

Key point---There is a place for responsible borrowing, but great care is needed to ensure that we are not putting ourselves in a bad financial situation.

The County Board is being asked to consider borrowing $10 million dollars to fund road improvements, and another $12 million in 2023.  This represents almost 20% of our annual budget, so this is a big decision.

I was at this week's Executive Board meeting, where the resolution to pursue this borrowing was passed.  The resolution supporting the borrowing proposal will come before the County Board in August.  Some of the key things about this borrow:

• We will decline to increase the tax levy.  With levy limits, borrowing money is an exception that allows a government agency to increase the tax levy.  We will not be electing to do this.  Instead, we will repay the loan using existing tax revenue.
• The bonds are each 10 year issues, with the 2018 bond around 2.68% interest and the 2023 bond estimated at around 3.87%.
• Repaying the bonds back early would be an option after 7 years.
• The current County debt level is extremely low.  At last check, we had the 2nd lowest debt per capita of any county in Wisconsin.
• What future borrowing would we anticipate after 2023?
• If we chose to do a "pay as you go" approach, it would require deferring some road maintenance until around 2030, and there would be additional costs associated with that.  Besides the increases in prices for labor and supplies, there would also be additional routine maintenance for the years between 2023 and 2030.  I have asked for some information on what those additional costs might reasonably be estimated to be.  Whether or not it exceeds the $4.5 million in interest payments will be a key consideration for me.
• The Executive Board rejected the idea of a referendum for a 1-year tax increase to cover the maintenance costs.  That 1 year increase, using "back of the napkin math," might cost taxpayers an additional $10 for every $100 on their tax bill.  So for example, my tax bill is about $2,600 so this would be an extra $260 on my tax bill for 2019, with taxes returning to 2018 levels for 2020.  As I mentioned, the executive committee rejected this approach.

I am going to continue to review the information on this very closely as I consider whether or not this is a good move for the county.  In the meantime, I also welcome feedback from any of my neighbors in District 3.