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Grayson extends line of credit

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By Ben Bomberger, Reporter

INDEPENDENCE – For the second year in a row, Grayson County leaders were forced to borrow money after cash-flow challenges.

Grayson County Administrator Jonathan Sweet told the board of supervisors during its regular meeting Aug. 13 that the first drawdown of $2 million was received the day before.

Sweet told The Gazette that the county took out a Tax Revenue Anticipation Note with Carter Bank & Trust by way of competitive bid to assist the county with cash-flow deficiencies.

“Due to the nature of [revenues] and an insufficient fund balance, the county does not have the cash on hand to make all of our payables and allocations until taxes and other incremental revenues are received,” Sweet added.

To aid what Sweet called the “cash-flow challenges,” the county opted to switch to twice-a-year tax collections for fiscal year 2009-10. Regardless of the change, the county still faces a shortfall two months before the first round of taxes are due.

The total amount secured was $3 million, and the county received two-thirds of that on Aug. 12.

Sweet noted that this occurrence is not unusual for local governments, but “it is not exactly the most desirable position to be in.”

Making the change to semi-annual tax collections was the first step to dig the county out of the hole, Sweet said.

“I think that we can consider the county to have put our shovel down and now we are looking at ways of extricating ourselves from the rut,” he continued. “Time, planning and proper management will be our friend as the county looks to steer this ship to more placid fiscal waters.”

It was the same time one year ago that county leaders were forced to obtain a $1.6 million loan to pay bills.

The loan addressed a shortfall in cash flow and former County Administrator Bill Ring assured the board — and citizens — that the county was not broke, but simply had unexpected bills due before the bulk of the county's budgeted revenue was received.

This year, Grayson will receive one-half of its tax revenue two months earlier, with citizens' first tax payment due on Oct. 5. The second half won't be due until April 5, 2010.

Supervisors began looking at opening a line of credit with various local banks one month after the shortfall last year. After receiving proposals from both SunTrust and Carter Bank, the supervisors voted in March to open a line of credit with Carter.

Originally, the note was a maximum of $2 million, but supervisors later bumped that number up to $3 million.

Carter offered the county a fixed interest rate of 2.5 percent, with no bank or unused portions fees.

In other words, the county will pay $2,083 for 30 days per $1 million borrowed.