I have long supported building a new and bigger jail. However, I do not support the way the new council is funding it by borrowing a ton and raising taxes the end of next year to pay for it.
The old council saved about $25 million. It decided to build the new jail, put down about $17 million cash and borrow $8 million over 10 years. It was going to keep about $8 million cash in savings.
That would have been the prudent thing to do. The rating agencies and financial auditors require cash balances of 17% and the $8 million cash savings left over would been about 19% of the annual budget.
Additionally, putting that much cash down would have minimized interest charges. If you are swimming in cash and decide to buy a house, you go with a big down payment to keep your borrowing and interest charges low.
The new council immediately scrapped that plan and decided to put nothing down on the jail, to borrow $25 million over 20 to 30 years, and keep all the cash to spend on a long list of other projects. Not only will their new plan will nearly quadruple the general obligation debt, but it will lead to an unnecessary tax hike the end of 2018. Additionally, the new council’s plan incurs an extra $7 million in interest costs over the life of the loan. Paying that $7 million in extra interest yields no benefit, not one repaved road nor one new sheriff’s deputy.
Reading the latest article, the estimate for the jail is now $30 million and they plan to borrow $26.5 million, making all the numbers worse.
And think about this. The school district is paying about $25 million a year on average for the school building bonds over 25 years. That money goes to bondholders, most who live outside our county or outside our state. So every year about this time, there is this loud sucking sound when we in Pickens County dig deep, make that $25 million payment and that money is sucked out of our county.
And now the county council wants to do the same, so there will be less of our money that will be spent at local stores or invested in local businesses. And we wonder why there is so little job growth in our county.
Finally, the county expected and the public was told the jail would cost $25 million or less. One of the councilmen said he thought we could see $20 million bids. The true cost is going to be $30 million. This tells me the councilmen and those advising them don’t know the construction market and pricing, and I worry they could be taken for a ride by these contractors.
In sum this new crop of councilmen know how to spend our money, not manage it, and that is quite apparent to those looking closely at this situation.