Back It Goes

"You find out your mistakes from an audience that pays admission." Edgar Bergen

We all make mistakes. Some are more costly than others. And sometimes the price is paid with other people's money.

The Yavapai County Board of Supervisors today voted to return the $50 million lease purchase agreement loan it approved to fund it's ambitious capital improvements program in April of last year. Interest payments on the loan are $26,563 a week and there is a $500,000 penalty for early repayment.

The earliest date for repayment of the loan is May of this year. Yavapai Central has requested the exact figure for the total cost of the loan to taxpayers from its inception to the repayment date and will report that amount as soon as it becomes available. But estimating the cost based on the fact that the loan was for a minimum of one year or 52 weeks, the total interest from May 1, 2008 to May 1, 2009 would be $1,381,276. Adding in the early payment penalty then brings the total cost to $1,881,276.

The board ultimately chose to approve "Capital Improvement Plan Alternate #5" from an array of 6 choices presented at the last meeting. Alternate Plan #5 includes these key elements:

• Building the Juvenile Detention Center at the county's Prescott Lakes Parkway site
• Taking two planned office buildings planned for the same site off the table
  
• Not using money from the contingency fund
• Apportioning 30% of the county sales tax to capital improvements
• Adopting a "pay-as-you-go" approach to capital improvements
  
• Returning the $50 million loan
• Using $14 million in capital reserves

The board also discussed a recommendation that all departments cut their budgets 7.5% across the board. A budget proposal prepared by staff and presented by county administrator Julie Ayers redirects 50% of the half cent sales tax to the general fund, 30% to the capital improvements program and 20% to the regional roads program. The half-cent sales tax goes into the General Fund and the monies are allocated according to the board's priorities and at its discretion.

Supervisor Springer questioned whether the cuts proposed could be made by all departments without affecting personnel.

"Is it possible to cut that much without laying off people?" she asked, and suggested the other two supervisors were "attacking the problem with a meat cleaver." She added later in the meeting that she believed the proposed alternative and the across-the-board cutting "is not a fiscally sound financial plan."

Chairman Thurman said he "had no idea" when he voted for the $50 million loan last year that the economic downturn was going to be so severe, but now he felt the best thing to do would be to return the money and scale back the building program.

Under current conditions, said Thurman, "you can't borrow money to buy a new car. You have to fix the old one right now." He added that he considers this a "moral decision," and that he believed the departments themselves know best how to meet the cost-cutting goals. "I'm not going to micro-manage these departments," said Thurman.

Supervisor Davis concurred, complimenting department heads on their efforts so far and calling on his fellow supervisors to support them.

"Now more than ever our employees have stepped up to the plate," said Davis, adding that by scaling back now "when the economy returns we're poised and ready to get back to work." He called the alternate plan a "reasonable proposal that makes sound financial sense." It was Davis who made the motion to act on the proposal. Thurman voted with Davis to approve and Springer voted "no."

An earlier idea to relocate the Juvenile Detention Center to a remodeled Gurley Street jail facility was scrapped. Supervisor Thurman said the cost of remodeling the older building for that use was prohibitive, but locating administrative offices there would be cost-effective. He mentioned the county attorney's and public defender's offices as potential tenants.

Supervisor Springer disagreed saying the Gurley Street building "doesn't meet the needs" and that she favored "keeping the reserve and continuing those [building] programs."

Also considered today was the timing for a return to the voters to approve a 1/4 cent increase in the county sales tax to pull the special jail district out of its ongoing deficit. The tax would also help create funds for future construction of an adult detention center in Prescott, according to officials. Supervisors and sheriff alike agreed that the need to close the Gurley Street jail made this even more imperative.

"By closing the Gurley Street jail," said supervisor Thurman, "the people found out we are in dire need."

The matter of the jail tax will be considered again and possibly brought up for a vote at the February 2nd board of supervisors meeting in Prescott.

[Musings: What if all the supervisors had listened to the public last April and voted not to incur the $50 million debt? What if?]