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End in sight for jail tax?

Commissioners talk early payoff of jail bonds, extending tax

Staff writer

The county’s half-cent sales tax that raises half a million dollars a year can pay off the jail bonds five years early, but commissioners talked through options Thursday for keeping the tax on the books.

The county needs about $2.2 million to pay off the bonds and currently has about $1.9 million in the bank, according David Arteberry, an adviser and underwriter on bond issues from George K. Baum & Company.

Projections show the jail tax will generate enough money by the end of February 2018, even though the bonds do not mature until December 2023.

Arteberry said the tax can be off the books a year from now. The jail sales tax could even be eliminated as early as April 1 if commissioners would transfer about $150,000 into the jail bond fund.

However, commissioners sought and received approval from the legislature this spring to extend the tax if voters approve.

County clerk Tina Spencer called it a “successful tax” and asked for approval from commissioners to seek out a facilitator who would identify countywide priorities and potential projects that could be financed through keeping the sales tax in place.

Several possibilities were brought up by people at the meeting, including a Bowron building renovation or a new transfer station.

Arteberry said extending the sales tax would be enough for a $7 million bond issue over 20 years.

Chairman Randy Dallke said some state legislators expected the county to ask to double the sales tax. He added that public input will be important and suggested holding a work session.

“I don’t think we should wait,” commissioner Dianne Novak said.

The earliest the county can pay off the bonds is Dec. 1, 2018, even if it collects the full amount by February. Most of the bonds have a 2 percent interest rate, but the money in the bank is not collecting much interest.

“It’s a nice, low rate on (the bonds), but if you can pay it off, you might as well,” Arteberry said.

The sales tax itself cannot be canceled until the county has enough money to pay off the bonds.

If the county has the money in February and notifies the state by April 1 that it is eliminating the tax, it would come off the books July 1 because the state requires a full quarter’s notice.

However, if the county topped off the jail fund in December with a $150,000 transfer from the general fund, the tax could be eliminated April 1, Arteberry said. Sales taxes collected from January through March would more than repay the general fund.

Arteberry said extra money raised by the tax can be used for whatever the original ballot question authorized, which likely is not wider than the jail tax.

“If you don’t need it for that purpose, then as I understand it, it would go back into the county’s general fund,” he said.

The ballot question authorized a 1 percent sales tax, even though only half a cent is levied, and is worded strictly for construction of the law enforcement and emergency communications facility.

If commissioners want to extend the tax for a different project, they need to obtain voter approval in November. Spencer said the two months until then is little time to formulate a project.

Should the tax lapse, retail stores, restaurants, and every other business subject to sales taxes would adjust to a lower rate only, to have it go back up again if voters approve a project months later.

“Once this tax drops off, you’ve taken legislative steps to be able to implement another tax if you want to, to replace it,” Arteberry said. “It would make some sense to try to do that as seamlessly as possible.”

To make a new tax have a seamless transition, the county would need to notify the state at the same time as canceling the old tax.

Spencer said there is probably not enough time to have a ballot question by November for a detailed project. She said a mail ballot election in the spring would be more ideal, but said that is more expensive, but also has higher voter turnout.

Last modified Sept. 6, 2017

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