CANTON — St. Lawrence County will pay back next week the $10 million it borrowed to make sure it could pay its bills this year — only to turn around and borrow another $10 million to cover what it believes will be continuing cash flow shortages.
“I’m going to be repeating this for years to come,” county Treasurer Kevin M. Felt said.
The county started borrowing in 2011 after a series of events left it with a fund balance of about $3 million.
“It was frittered away,” said Legislator Joseph R. Lightfoot, R-Ogdensburg.
The state Comptroller’s Office recommends a fund balance of $10 million to $12.5 million for the county.
“We had little or no fund balance when we started borrowing,” county Administrator Karen M. St. Hilaire said. “We got to that point over a number of years when the fund balance was used to keep property taxes low. The trend was to take out significant amounts.”
The county once had a fund balance of $22 million. Legislators for three years in a row took $7 million out of the fund balance to lower the tax levy. While some of the money was returned to county coffers at the end of the year, the fund balance became depleted over time.
The county started borrowing after Mr. Felt warned that he needed a cushion to ensure he could pay the county’s bills, including a monthly payroll of about $3 million. At that time, the state was slow in paying what it owed the county, and pension costs had doubled because the stock market plummeted.
The county’s finances also took a hit when state/tribal gaming compact money stopped coming because of a dispute over the St. Regis Mohawk Tribe’s casino exclusivity rights. Compact funds are again coming to the county. The state has improved the time it takes to pay what it owes, and the county’s fund balance has grown from $3 million to $7.8 million at the end of 2013.
“I am holding a little more cash than a year ago,” Mr. Felt said.
The county raised the local share of the sales tax from 3 percent to 4 percent, which was expected to raise revenue, but legislators also lowered property taxes by the same amount that they had raised them the previous year. While the amount of sales tax is up overall this year, a general drop in the amount of taxable sales in the county has kept the revenues from keeping pace with budget expectations.
County legislators for 2014 budgeted a 1 percent increase in sales tax revenue. Based on a rate of 4 percent, that would mean an expected $58.5 million in revenue, but the county is on track to take in $57.5 million.
“We budgeted more than we should have,” Legislator Frederick S. Morrill, D-DeKalb Junction said.
However, the increase in the sales tax and efforts to rebuild the fund balance have helped the county’s credit rating, which took a hit in 2012.
“Our score was the same, but the negative outlook was removed,” Mr. Morrill said.
The size of the county’s fund balance is not large enough yet that the county can stop borrowing, Mr. Felt said.
He said he wanted to be sure the county had enough to pay its pension bill of approximately $7.5 million in December so it receives an early payment bonus of about $65,000.
Mr. Morrill said he thought the county’s finances had improved enough that it could have gotten away with borrowing $8 million rather than $10 million, but he did not want to run the risk of the county’s not having enough to pay the pension bill early.
The costs and interest to the county of borrowing the $10 million will amount to about $100,000, minus the bonus for paying the pension bill early.
Ms. St. Hilaire said she hopes the county can stop borrowing within the next few years as it adds to the fund balance.
“We need to be careful how we spend what we have,” she said.