Bond upgrade could add up for county

Bob Shiles Staff writer

November 10, 2013

LUMBERTON — The recent upgrade of the county’s bond rating could save Robeson County millions of dollars in interest over the lifespan of major capital projects, according to Kellie Blue, the county’s finance director.

Some of that could be in the construction of a new jail, which the state is pressuring the county to build.

The county’s bond rating has been increased for the first time in more than a decade by Standard & Poor’s — one of two major financial services companies — from“A with a positive outlook,” to “A+ with a positive outlook.”

“It’s a significant savings from 5 percent to 2 percent interest over 15 or 20 years,” Blue said. “The savings could easily be in the millions. It could be phenomenal.”

Blue said that she was surprised that the rating had been upgraded.

“I was surprised considering the economy,” she said. “I was hoping that with the economy the way it is our A rating would not be downgraded.”

Ricky Harris, the county’s manager, said that the fact that the county’s bond rating has increased at a time when county, state and national economies are anything but bright indicates “fiscal responsibility.”

“With the economic times the way they have been over the past five years, it’s great to get an upgrade in our bond rating,” Harris said. “It shows the fiscal responsibility of both the county staff and county commissioners.

According to Standard & Poor’s summary of the county’s financial state, “the stable outlook reflects our expectations that Robeson County will maintain its strong financial position supported by its strong liquidity and budget flexibility … Also, given the limited debt plans, we expect its debt profile to remain strong.”

Blue said the increased bond rating is coming at a “great time” for the county.

“We’re looking at having to construct a new jail and possibly a new high school,” she said. “The upgraded rating gives us a little more leverage in getting competitive rates. It shows we have the ability to pay. We will have no trouble selling the bonds.”

Blue said that the commissioners will have to make a decision on how they want to fund the jail, high school, or both.

“The commissioners have already said they will not raise (property) taxes,” she said. “They could try to fund the capital projects through reserve funds, or possibly a 1-cent sales tax.”

Blue said she favors the sales tax, which would mean “everyone,” not just property owners, would contribute to paying the cost of jail and school construction, or other capital projects.

“I would love to see a 1-cent sales tax that could permanently be set aside to assist funding school and other county capital projects,” Blue said. “I think a 1-cent sales tax that we could keep for school construction would be great. I’m sure the technology high school will not be the last school that will ever have to be built in Robeson County.”

A sales tax would have to be approved by the state General Assembly.

All the county’s financial records are reviewed by Standard & Poor’s when they consider the bond rating for a county, Blue said. She said the county’s strong fund balance was probably a significant factor in the county’s bond rating being upgraded.

Harris said last week that the county’s fund balance is about 22 percent of the overall budget, and that the county’s has risen in recent years while fund balances for many local governments have suffered because of the poor economy.

Blue told the county commissioners at their Monday meeting that the financial companies, such as Standard and Poor’s, realize there are significant financial restraints placed on a county, such as a weak economy, that cannot directly be influenced by local financial decisions.

“We, however, believe that the limitations of the local economy, coupled with the high unemployment rate, will continue to constrain the rating,” the Standard & Poor’s summary reads. “As such, we do not expect the rating to change within the outlook period.”

Blue said that even with the improved bond rating, she will not recommend to the commissioners that they try to fund both the construction of a jail and new school — both multi-million dollar projects — at the same time through the sales of bonds.

“I couldn’t do that,” she said. “That wouldn’t be financially responsible.”