TRAVERSE CITY — Grand Traverse County commissioners are considering a plan to sell tens of millions of dollars worth of bonds while they review countywide services in an effort to close a big budget gap.
The county’s 2014 budget includes a shortfall just shy of $1.5 million. Officials hope to negotiate about $500,000 in savings through ongoing talks with some of the county’s collective bargaining units, but for weeks commission members have wrestled with how best to address the remaining deficit.
A proposal to pay for the county’s unfunded accrued retirement liabilities through bond sales came up again during a recent budget meeting.
County Administrator Dave Benda said the answer to the 2014 budget problems could lie in a bonding plan.
“We can structure it so the savings up front are $950,000,” Benda said.
The proposal involves the county selling bonds -- $45 million worth, based on the most recent proposal -- and using the money from bond sales to pay off the county’s unfunded pension obligations. That would, in essence, exchange the county’s annual pension payments, which accelerate each year for roughly the next 10 years and then decelerate thereafter, with consistent annual debt service payments over a 20-year period, based on a presentation before the board by Warren Creamer, director of public finance at Robert W. Baird & Co.’s Traverse City office.
Board member Larry Inman said he worries about the county borrowing such a large sum. He also worries that an 8 percent assumed return on Michigan Employee Retirement System investments will hold up.
“At this point, I’m not in favor of going forward on bonding,” he said.
Benda said commissioners will discuss the bonding proposal further during a budget meeting today at 1 p.m. and during a regularly scheduled committee meeting tonight.
Proposed cuts to the county’s Parks and Recreation Department, including eliminating the department’s administrators and the county’s indoor swimming pool, could be dead in the water. Dozens of community members and leaders packed last week’s meeting in support of the pool and department Director Jason Jones.