Blount Budget Committee OKs letter-of-credit resolution
By Joel Davis | (email@example.com)
The Blount County Budget Committee on Monday unanimously recommended approval of a resolution to switch a letter of credit associated with a bond issue to JP Morgan Chase.
The resolution is meant to formalize an action that the Blount County Commission has already taken. In January, the commission voted unanimously to spend $55,000 to switch out a letter of credit backing the E-3-B variable rate bond issue.
“The business case is the same,” Finance Director Stephen Jennings said. “We will spend about $55,000. ... Our interest rates will drop substantially.”
The change was made because interest rates associated with that bond issue, which had been previously been backed by a letter of credit from a Brussels bank, had jumped half a percentage point since November because of investor concern about turmoil in Europe. The change in the letter of credit will offset that increase in interest costs, Jennings said. “It’s a win, win, win.”
In other business, the committee unanimously approved a $14,000 transfer in the Animal Control budget and a $6,000 transfer in the library budget for personnel. It also recommended a $13,794 transfer to purchase a map scanner in the Register of Deeds Office. The need for approval is a technicality due to accounting rules, Jennings said.
“The money has been budgeted,” Register of Deeds Phyllis Crisp said.
Jennings also said the Animal Control transfer was just a housekeeping matter to clean up the current budget after responsibilities were transferred due to a change in leadership. “There was too little money put in the salary lines,” he said.
Debt ‘road map’
The committee also took another pass at recommending a debt management policy for Blount County. Among other changes, the revised policy specifies that the county would not only consider tax increases but budget cuts as well to retire debt early.
According to the guidelines, the county would also strive to eventually have no more than 20 percent debt that had a variable interest rate.
County Commissioner Steve Samples said he did not like the county even considering having any variable rate debt. “That just really scares me,” he said. The full County Commission will consider approving the policy at its next meeting.
County Commissioner Mike Lewis, however, said there are times that variable rate debt can be useful especially when used in the relative short term while waiting for long-term interest rates to drop. “Variable rate is not necessarily bad,” he said. “It’s a tool.”
Having debt guidelines will be useful for the county, Jennings said. “It’s a good road map for where you want to be.”