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Consultant: Wise could shoulder $50M in debt with no tax hike

Published November 5th, 2009 | 1 Comments

WISE — An independent financial consultant on Thursday said Wise County could take on from $35 million to over $50 million in debt for school projects without increasing taxes, confirmation of a previous debt management scenario provided to the Board of Supervisors by the county’s finance administrator, David Cox.

During Thursday’s workshop session, David Rose of Davenport & Co. LLC, based in Richmond, told supervisors the county could fund another $24 million in other capital projects, including about $12 million for courthouse renovations, while taking on over $52 million in debt for high school consolidation.

Thursday’s presentation sets up another potential vote next week by supervisors to make a financial commitment to the Wise County School Board’s plan to build three new high schools and close the existing six high schools. Total projected cost of the consolidation project is currently estimated at between $90 million and $100 million.

The Davenport analysis maintains a conservative fiscal line — not taking into account a projected $3.2 million annual savings by the school division by cutting in half the number of high schools it operates, or a $9 million fund the county set aside for school construction projects — while keeping an eye on potential state budget cuts. Rose also said the county could set up a separate capital reserve fund in excess of $10 million and still handle the debt load without a tax increase.

Borrowing affordability scenarios ranged from a “worst case” $35.5 million debt load for schools that assumes no federal or state loan programs in play to a more realistic $50 million range.

Rose said there are “fast talking” financial advisers who could lay out how the county could take on $97 million in debt for schools, but his company prefers an approach that doesn’t include risky ventures on long limbs.

“You know, there’s a way to do ($97 million in debt),” Rose said. “There’s just not a way to do that and sleep at night.”

Two months ago, supervisors failed to make a financial commitment to the high school consolidation program on a tie vote. Big Stone Gap Supervisor J.H. Rivers vowed to bring the matter back for another vote, and Thursday’s presentation sets up a potential new vote by the board during next week’s action session.

Rivers wanted the Davenport analysis to be presented before a second attempt at the consolidation funding vote.

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Funny stuff. How much did they pay the "independent consultant" to give them the answer they wanted, so they can do what they wish and claim some third party told them it was OK?

If it turns out they need a tax hike after shouldering that debt, has the independent consultant taken out an insurance policy that will pay the difference? In other words, is he guaranteeing his work? Because if not, his claims don't mean squat.

If the county has so much excess cash laying about, doesn't that really mean that taxes have been too high and should be lowered?

Jeremiah Jones | 11/6/2009 - 6:57 PM - ( Comment

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