Why borrow for a new library, when Perquimans has mega cash on hand?
PERQUIMANS COUNTY – The County Commissioners here seek to increase property taxes in order to make up the difference between current property values and what is needed in revenue to finance county operations.
You would think that they were doing this because of a revenue shortfall, but you would be wrong!!
Perquimans County – like other sparsely populated rural counties in eastern North Carolina — is required to maintain a fund balance (also known as savings, or ‘Rainy Day Fund’) in an amount equal to at least 8 percent of the county’s annual budgeted expenses.
However, the Perquimans County is currently maintaining a fund balance of a whopping 40 percent! This means, with an annual budget of approximately $12 million, the County would be required to maintain a $1 million fund balance but in reality, the fund balance is five times that amount or approximately $5 million.
These numbers were provided by County Manager Frank Heath in response to questions submitted about the new library project. Heath provided an email response that the fund balance is 40 percent – which has led many to claim that Perquimans County is overtaxing its citizens.
Even with its current financial situation, county officials want to raise property taxes even more, rather than giving the citizens a tax holiday, which would have the benefit of returning some of the excess taxes to the taxpayers who have been overpaying their taxes for a very long time.
In the same email, Manager Heath spoke about the potential to borrow the funds for the new library rather than using monies from the fund balance. The rationale, we presume, is that the cost of borrowed funds is so low that it is worth the small interest cost in order to keep those funds on hand within the county.
That makes a lot of sense if you are maintaining a low fund balance. But with the fund balance that the county has, it seems foolish to go into a long-term debt situation while you have money in the bank.
Back to the issue of the new library! Perquimans County has just received replacement bids, which apparently will reduce the library cost to something in the neighborhood of $2.5 million.
In speaking with a county commissioner, the justifications for this library were all very unspecific. The elected official stated that the library should be a place for groups to meet and for county organizations to conduct meetings, among other things. It was also said that the Board of Commissioners had looked at the prospects for expanding the old library on vacant land adjacent to the current site and that additional off street parking in the area had been evaluated as well.
The statement that these expansion matters would cost as much as a new building (or nearly so) seemed completely implausible. Frankly, this entire matter looks like one of trying to justify a bad decision rather than relying upon valid reasons.
Further, it has been said that the county is expecting growth and this new library would position the county to meet the future growth needs of the area and bring people in from other areas. This explanation seems laughable on its face.
If future growth were the real impetus for this library, why not expand the old library until the growth materializes, then build a new library if that is necessary? The calls for a new library in the face of increased use of the Internet for research papers certainly belie the need to spend so much money.
How much money it will cost to expand the old building, while somewhat uncertain, surely would be well below the $2.5 million projected cost of the new building. The county has rejected the bids one time and they should vote to suspend action on funding for the new library at this time.
We question the patronage of this library and we also question whether or not the commissioners have actually explored the alternatives, or whether that is a smokescreen? Documents have been requested of the County Manager, including copies of meeting minutes so that we can ascertain what if any real evaluations of these options actually took place. Once the documents are supplied, we will provide a further report of our findings. In the meantime, we suggest that the commissioners suspend action on awarding a contract for this library.
We call on the Perquimans County Commissioners to suspend plans to raise the property tax rate until such time as a decision about the library can be reached and a total evaluation of the county finances can be sorted out in the public square.