Tax anticipation notes, short-term government loans based on projected revenue from taxes, may become a norm to aid DeKalb County’s cash flow.
“We acknowledge that the need for tax anticipation notes have become more of a necessity than just kind of a desire,” said Commissioner Lee May, who chairs the Board of Commissioners’ finance committee.
“We want to make sure that we have sufficient cash reserves in each tax fund as needed,” May said at a Nov. 8 meeting during which the commissioners approved a resolution detailing their 2012 budget priorities.
In the resolution the board asked that the county’s CEO present requests for tax anticipation notes at the beginning of each year until the county’s cash reserves are built up.
Because tax revenue for DeKalb comes in two lump sums late in the year, DeKalb in the past has relied on its cash reserves to cover its bills. Decreasing property tax revenue due to the economy has eroded those reserves and for the past three years the county has ended the year with negative fund balances, according to county finance director Joel Gottlieb.
“The first three quarters of the year we have less than what we need,” Gottlieb said. “When we have larger reserves, that is not a problem.”
Gottlieb said the county should be able to close the current fiscal year with money in the bank.
“The actions taken by the county [and] by the Board of Commissioners in 2011 have sufficiently raised revenues for the operations of the county to finish off the year with a positive balance,” Gottlieb said.
The county administration plans to seek a tax anticipation note in January, Gottlieb said.
In addition to the early use of a tax anticipation note, the county wants the CEO to “structure payments to agencies that are being subsidized to be paid only after property taxes come in, so the county does not take out loans on behalf of other agencies,” according to the resolution.
CEO Burrell Ellis is required to present his proposed budget to the Board of Commissioners by Dec. 15 for approval. And with that submission, the board also wants a five-year budget forecast so it can better plan for the county’s financial future.
“So many times we [the commission and the CEO] over the decades have just operated in a vacuum,” May said.
Three of the 15 categories in the budget resolution deal with employee health benefits, pensions and retiree health care.
These categories are “becoming an overwhelming share of our budget each year,” May said. “We really are just talking about more opportunities for flexibility and the hope is that we will realize a cost savings over years.”
In its resolution, the board asks that the CEO include with his proposed budget several items including estimated beginning and ending fund balances for each tax fund, complete listing of full-time positions and proposed positions for 2012, and estimated tax levies.
These are “internal processes that will hopefully allow this board to get a better and quicker grasp of the CEO’s proposal,” May said. “When we get the budget on Dec. 15, it takes us a second to really grasp everything that’s in it.”