County residents to vote on fundsPublished 8:12am Wednesday, May 22, 2013
Escambia County residents will have a chance to vote on a proposed amendment aimed at allowing county officials to borrow funds from the county’s Oil and Gas Trust Fund.
A local bill proposing the amendment was passed during a session of the Alabama Senate that ended this week in Montgomery and now goes to the governor for his signature. The amendment would allow the county to use the funds for road and bridge improvements, and county officials have said the money could be used, for example, to provide matching funds for road and bridge grants the county has already received from the state Department of Transportation.
Escambia County Commission Chairman David Stokes said the county commission will have to decide when to schedule the vote on the amendment once the governor has signed the bill.
“We have to sit down and decide when the amendment will be put on the ballot for a vote,” Stokes said Wednesday.
County Administrator Tony Sanks said the county will have to repay the money.
“The passing of the amendment would give the county the authority to borrow money from the trust fund but would require the money to be paid back to the trust fund within 10 years,” Sanks said. “That repayment would actually be a gain in revenue for the county.”
Sanks said currently the trust fund is invested in certificates of deposit and government securities, which is required of the funds.
“With the way the market is right now, the trust fund investments are earning less than 1 percent in interest,” Sanks said. “If we are allowed to borrow from the trust fund, the repayment would have to be made at 1 percent more than the interest being paid on U.S. Treasury Notes at the time the funds are borrowed.”
Stokes said the opportunity to borrow from the trust fund just makes “good sense” when it comes to interest rates earned and paid by county dollars.
“The oil and gas trust fund value is shrinking because of the limited way it can be invested,” Stokes said. “The most recent renewal of one of the investments — which was at $1 million plus — was .8 of one percent. That is why we asked Alan (Baker) and Marc (Keahey) to put this bill in for us and then of course, for the people to decide. We are obligated to pay it back to the trust fund, but we could borrow from the fund at a lesser rate than through conventional means. And, we can pay back more than what we could earn by the way the trust funds are invested. It makes good sense — if the people want to allow us that discretion.”
The proposed amendment states the county can use the money for infrastructure and economic development.
Sanks said the borrowed funds would be a benefit to the county in many ways, but would be the best benefit for road and bridge projects across throughout the area.
“Right now we have some serious needs in the road and bridge department,” Sanks said. “If we had the option to borrow money for those projects, it would be a blessing. Looking at some grants that can be available to the county for those kinds of projects, we would still need some funding. Many of those grants require matching funds that we just don’t have.”
Stokes said economic development opportunities could also be more attainable in the county if the trust fund could lend incentives for business and industry growth.
“There are opportunities out there that we would benefit from if we had that funding at our discretion,” Stokes said. “If an opportunity comes up for an industrial site in the county that we needed to initially have some funding for, then we can borrowing from trust fund and pay ourselves, and be able to benefit from those opportunities.”
Stokes said things like providing industrial access for businesses and industries looking to move to or expand in the county would be a plus for economic development in the area.
“Industrial access could be an issue for someone looking to come to Escambia County,” Stokes said. “Money could be used for needed railroad spurs. By being able to borrow from the trust fund, we wouldn’t have to wait for a bond issue that has underwriting fees attached to it. It could be done the right way. In a bond issue, you only get 94 to 96 cents of a dollar. This way, we’d be getting the whole dollar. We would only do that if it is something that’s going to benefit us in the count, with jobs and growth.”