Commissioners Debate Health of Debt
By JOHN LENTZ
Few things are as hotly contested in Moore County politics as the state of the county government's debt, and the debate couldn't be sharper within the Board of Commissioners.
County Commissioner Tim Lea, who frequently finds himself the odd-man out against his four colleagues, says that debt has hit an unprecedented high, claiming that the figures "speak for themselves."
But Commissioner Nick Picerno, who has eagerly led the movement toward greater fiscal control, says that those figures are misleading and are presented as a political statement that fails to tell the complete story.
The crux of the debate is just how much Moore County owes for all the money it has borrowed to improve schools, add utilities and build a new detention and public safety center in Carthage - and what it says about the financial health in Moore.
Statistics obtained from the assistant county manger's office show that the amount of debt the county owes has increased 256 percent since 2007 when measured by fiscal year.
As of June 30, Moore owed a principal of $142.4 million. Adding more than $55 million in interest, the total owed comes to more than $197 million.
By comparison, in 2007 the county owed $55.5 million.
The debt figures include amounts incurred as a result of projects for Moore County Schools, Sandhills Community College, utilities and other government projects.
But Picerno said the facts are not as they seem.
"For political purposes, these figures have been set up in such a way to make things look as bad as they can," he said. "If you add it up, you will see that water and sewer costs and voter-approved bonds make up the majority of the debt we have in the county.
"In my opinion, this spreadsheet is disingenuous."
County Assistant Manager Ken Larking said that the $197 million in debt shown in statistics ending June 30, 2012, contain unaudited numbers that do not include the recent decision to pay off "certain bonds."
He said that the loan for the water pollution control plant "increased the principal for utilities by $11 million as of June 30, 2012. The full weight of the $20 million loan will show up at project completion."
Larking also pointed out that all utility debt is paid by the users through the appropriate user fees, not taxes.
Picerno, who is seeking re-election in November, said the figures fail to include the county's payoff of the voter-approved $6.9 million school bond issue, done after the 2012 fiscal year ended, which "considerably" lowers the debt amount.
"If we're so far in debt, how have we been able to cut taxes and pay off debt early, including school spending?" he said. "It makes me ill to see how these politics are being played."
Picerno, who has taken the lead on financial matters for the commissioners, frequently goes around the county promoting his board's conservative stewardship on all matters related to taxing and spending.
But Lea, who is not running for re-election this fall after spending eight years on the board, countered that the statistics "don't lie" when one compares the numbers from year to year.
"One of the things I've tried to accomplish as a county commissioner is transparency," Lea said. "It is imperative that people who pay taxes know what their money is used for, and what outstanding debt the county has. That is what this report reflects."
Commissioner Craig Kennedy said that he believes the county is in a good financial position.
"Commissioner Lea points to interest, but it's just like a home mortgage. There's always going to be interest," he said.
"We're in good shape in Moore County. Overall there's not a lot of debt compared to other counties, and we have one of the lowest property tax rates in the state."
Kennedy said the future looks promising as well.
"The only thing I see on the horizon that I know we will have to spend money on is in school facilities," he said. "This will probably be another bond issue, which we will have to vote on to keep the schools up to speed. Thankfully we have a good, open communication policy with the board of education."
Total debt figures show a fluctuation year by year depending on what projects were being undertaken.
The debt increased 115 percent from 2007 to June 30, 2008 due to voter-approved projects, and the East Moore Water District Phase 2 increased the utility debt principal by $7.6 million.
In the 2008-2009 fiscal year, debt rose by 35 percent from the previous year when voter-approved bonds increased the principal by $29.5 million. By June 30, 2010, it had shrunk 7 percent from the previous year, for a total debt of $150,151,557.
By June 30, 2011, the debt figures rose 28 percent for the public safety/detention center. This increased the principal by $29.8 million, while the limited obligation bonds for Moore County Public Utilities added another $8.6 million.
The debt increase is most noticeable for public schools. On June 30, 2007, the debt related to Moore County Schools construction stood at $24.6 million, plus another $6.2 million in interest for a total of $30.9 million. Five years later, the principal had increased to $59.9 million, plus $22.1 million in interest, if not paid off or refinanced early, for a total of $82 million.
"That's a 166 percent increase in public school debt alone," Lea said.
Debt related to projects at Sandhills Community College rose 127 percent from 2007 to 2012, with a total amount outstanding of $27 million by June 30, 2012.
General county government debt went from $4.7 million in 2007 to $38.1 million in 2012, while utility-related debt increased from $7.9 million to $50.3 million over the past five years.
But the 2012 total debt figure showed less of an increase in comparison to 2010-2011, from $192.7 million to $197.6, a 3 percent increase.
"Every year, we pay off a little of the debt, and what's impressive is that over the next few years we will save $250,000 in interest," Picerno said. "This is because we paid off those school bonds early with no interest."
Contact John Lentz at (910) 693-2479 or jlentz@thepilot. com.
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