St. Croix County borrows $3.36 million with Stimulus Act subsidy
The St. Croix County Board voted Tuesday to borrow $3.36 million, using federal "recovery zone" bonds that will result in a true interest rate of about 2.23 percent.
About half the money will be used for building repairs, safety improvements, equipment, computer software and parking lot repairs. The remaining $1.7 million will be used to help the Highway Department catch up on its road repair schedule.
The intent of these Recovery Zone Economic Development Bonds, under which the federal government pays 45 percent of interest costs, is to stimulate economic development and create jobs, said the county's financial advisor, Joe Murray of Springsted Inc.
It's the cheapest money he's seen, added Murray.
The decision to borrow the money was not unanimous, though, as six of 31 supervisors voted against the plan.
The money will be repaid over seven years with an interest-only payment of $183,000 in 2011 and a final payment of $888,000 in 2017.
Instead of asking departments to make cuts in their budget requests and find ways to pay for needed building improvements or equipment, the County Board simply decided to borrow money, complained Supervisor Lorin Sather, River Falls.
While he had no objection to allocating over $1.6 million to the Highway Department, Sather said it doesn't make sense to borrow for some of the other items on the list.
Not only will the spending not meet a Stimulus Act goal of creating jobs, but borrowing will add to county costs as it repays the loans, said Sather.
"What are we going to do next year?" he asked.
"For the voters in my district, this is a once in a lifetime opportunity," responded Supervisor Buck Malick, town of Hudson. The interest subsidy makes the bonds attractive, he said.
Many of the things on the list of projects are wants but not needs, said Supervisor Linda Luckey, town of St. Joseph.
Her motion to pull $12,200 for a County Board voting system from the list was defeated on a 22-9 vote.
Borrowing for these capital projects rather than finding a way to pay for them through annual budgets isn't holding the departments accountable for their individual budgets, protested Dan Raebel, Emerald. He predicted administrators will get in the habit of not budgeting for capital needs.
The resolution to borrow adopted on a 25-6 vote with only Raebel, Sather, William Peavey, David Ostness, Steve Hermsen and Ken Kolbe voting no.