Wednesday, September 3, 2008

County pays off detention center early

Money saved to be used for roadwork

Julia M. Dendinger News-Bulletin Staff Writer; jdendinger@news-bulletin.com

What might take some counties 10 years, Valencia County has accomplished in eight. As of Aug. 21, the county made its final payment on the bond that financed the construction of the county adult detention center.

The county has paid nearly $700,000 annually on the bond since the payments began in 2000. Between the principal of $4.715 million and interest and administration fees, the county paid back $6,104,759 ahead of schedule.

The final payment on the bond was made from funds in a reserve account established when the bond was taken out. According to county finance director Wilma Abril, there was $487,721 in the reserve account. The final payout on the loan was $202,355, leaving a difference of $285,366 to come back to the county.

County Manager Eric Zamora said the bond issue went to the voters to authorize the county to take out the loan. "The county has to establish a revenue stream to pay back the bond," he said. "In this case, the county asked the voters to authorize a correctional facility gross receipts tax to commit to the repayment of the bond."

The authorization of the gross receipts tax (GRT) went through the process of publication, public hearing and a final ballot vote. The correctional facility GRT, unlike other taxes of this nature, has a "sunset clause." In other words, it expires on Dec. 31, 2009.

In addition to the correction facility GRT, the county also dedicated a portion of its general gross receipts from taxable sales made in the unincorporated county to the repayment of the bond.

Since the GRT is based on receipts, the more money spent in the unincorporated county the more taxes are collected, Zamora said. "The tax is intercepted by the New Mexico Finance Authority (NMFA) and held in a specific account," he said. "After the yearly payment is made, any remaining funds return to the county."

With the bond paid off, the correctional facility GRT will go straight to the detention center, alleviating some of the burden on the general fund, but only for the next 18 months.

"About two-thirds of the detention center's operational budget is supplemented by the county's general fund," Zamora said of the center's $3.28 million budget. "The facility takes in some revenue through joint power agreements with other municipalities to house their inmates, but it doesn't have a real revenue stream."

Now both the correctional facility and the county GRT coffers will get a one-time boost of cash. While NMFA was in the process of calling the bond and determining the loan payoff amount, they continued to intercept funds from the county.

Now that money is coming back also. A total of $436,201 was returned last month to the county with $233,664 going into the county's GRT fund and $202,537 in correctional facility GRT going to the detention center.

"When the deposit was made in the bank, the funds were separated," Abril said. "The correctional facility GRT can't be used for anything else." She went on to say that the county is waiting for the wire transfer of the balance of the reserve account, as of Tuesday.

By combining the funds expected from the reserve account and the monies collected during the calling of the bond, the county will realize a one-time revenue of approximately $519,030.

At last Wednesday's county commission meeting, Commissioner Ron Gentry put forth a plan for $500,000 of that money.

"With winter weather coming and a 25 percent increase in asphalt costs, we are getting less and less done with the money we have," he said. "I would like to take this non-recurring funding and supplement the road funding in each district."

Gentry said he would like to see the $500,000 divided evenly among all five commission districts. "This will let us finish projects we can't do with our current funding," he said. Gentry asked that the commission authorize the county manager to pursue funding sources for one-shot road project funding, specifically citing the impending payoff of the detention center bond.

Commissioner David Medina said that in the past several weeks he has met with the road department two or three times to get estimates on what it will take to get some roads done. "Looking at paving and sealing, with the funds I have, the answer was practically nothing," he said.

"For paving, I can do a quarter of a road and move on. My district has dozens of roads that need work; $100,000 won't solve the problems, but it will help a lot. If we can do this, maybe we can get some roads completely done."

Commissioner Georgia Otero-Kirkham pointed out that her district is all in the county. "I have no municipal roads. Most of the calls I get are about roads," she said. "This is not a situation that even began four years ago when we came on board. The roads have been neglected for years. I have people driving on the wrong side of the road because the potholes are so bad."

Otero-Kirkham said that it costs $100,000 per mile for paving. "I have 84 miles, so I would have to be commissioner for another 83 years to finish it all," she laughed.

Commission Chair Pedro Rael asked if the idea was to find the money for road projects in the general fund. "Is that realistic?" he asked. "Where will the funding come from?"

Gentry explained that since the bond for the detention center was being paid off, the county would be getting back $500,000 plus in one-time funds. "We can't use this money for recurring expenses, like salaries," he said. "But we can use it for one-time projects. With $100,000 per district, we could make a big impact. If we could do some maintenance on some of these roads, I think we will end up saving money."

Rael abstained from the vote authorizing the county manager to identify funding sources for countywide road projects, saying he was not entirely clear where the money was coming from. "I want to make sure we are not taking money from other needs," he said.

In an interview Tuesday morning, Abril said the commissioners could approve a resolution authorizing $500,000 of those funds for road projects in their districts.

"But this is a one-shot deal. The county won't be getting $500,000 every year," she cautioned. "The correctional facility GRT will go to the detention center, and it will relieve the general fund for a while."

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