The Putnam County Board of Commissioners (BOC) is looking into a move that Putnam voters have not seen in 40 years or more. In fact, few – if any – Georgia counties or cities have used this method for financing public projects for decades.
At the first of its two scheduled monthly meetings last Friday, the commissioners instructed County Manager Paul Van Haute to “put a pencil to” whether $18 million in road resurfacing projects over the next six years could be funded more cheaply – and more quickly – via general obligation bonds versus revenue bonds.
Historically, general obligation bonds once were about the only way local governments could fund large capital projects ranging from court-ordered jail construction to bridge and road construction to new school buildings.
However, the state allowing “local option” sales taxes beginning in the mid-1970s quickly proved more popular with voters, politically and psychologically, and with local governmental entities, politically and practically. Voters resented writing checks for property taxes and liked that somebody else would help pay the sales taxes.
Meanwhile, governments distrusted the referenda required for general obligation bonds.
Putnam now has four local option sales taxes (LOST): the local option for city/county property tax relief; the special purpose local option (SPLOST) for city/county capital projects, the education option (E-SPLOST) for school board capital spending, and the transportation option (T-SPLOST) for city/county road and bridge work.
Each is typically accompanied by the sale of revenue bonds in order for work to begin immediately rather than waiting for funds to accumulate.
Last Friday’s instructions from the commissioners came despite a recommendation from a Richmond, Va.-based public financing consultant to go with revenue bonds financed through the Putnam Development Authority.
The problem is not the source of the $18 million. Putnam voters have already approved the extension of the T-SPLOST for another six years, starting this fall.
Nor is the problem about the county government having to back the bonds with the “good faith and credit” of the county, i.e., its taxing authority (which translates into potential property taxes if the sales tax does not produce enough revenue to make the bond payments). Although rarely exercised, that backing is necessary for either type of bond.
As explained in brief comments from Van Haute, a serious second look at the general obligation bond route is warranted from two directions. One, G.O. bonds, as they are called, typically have enjoyed slightly lower interest charges. Two, having all the money available upfront, might not only get the projects done faster, but the projected savings from a single contractor’s set-up costs could result in savings for both parties.
A somewhat murkier factor involves who gets a cut in the action and how much each cut might be. Bond attorneys, local attorneys, banks, brokers, and large and small contractors are all in the mix.
In other actions, the commissioners approved: Another permit for the right-of-way use of broadband lines servicing Harmony Farms Drive (AT&T).
The appointment of Dr. Robert Betzel to a six-month and a full six-year term on the county board of health.
The awarding of a state-funded $1,052,000 road resurfacing contract to Pittman Construction Company.
Roads to be resurfaced include one mile of Old Phoenix Road, Dennis Station Road from Old Milledgeville Road to the Interfor mill, and Little Road at Bugger Bear Road. Van Haute noted that the low bid for these projects was the first one in a couple of years that came in close to the estimated costs.
Changes to the county government’s employee manual, generally aimed at less casual attire for office staff.