FARMINGTON -- To provide cash flow for county services and prevent the depletion of reserves, the Davis County Commission has approved $5 million in tax-anticipation notes with Zions Bank to cover costs for the remainder of this year.
On Tuesday the commission took the action to provide the county with the funding needed to continue to operate county services until tax notice payments come due in the fall.
Borrowing the $5 million for the next six months for operating expenses will cost the county roughly $3,000 in interest, Davis County Clerk/Auditor Steve Rawlings said.
Having a high grade rating reduces Davis County's costs in issuing the notes, said Zions Bank public finance representative Jonathan Ward.
"The rating helps when we place these bonds," said Ward, who anticipates the bank closing on the notes by Aug. 1.
"This is a very short-term commitment," County Commissioner Bret Millburn said of the notes the county anticipates retiring Dec. 27 this year.
Millburn said borrowing money at such a low interest rate versus depleting all reserves is good money management in that it protects the county's high-quality bond rating.
Each year around this time, the commission approves the issuance of tax notes to provide the county with the necessary cash flow the county needs to operate.
"This is a simple cash-flow issue," Davis County Chief Deputy of Audit and Finance Curtis Koch said.
The notes are needed because the county begins to offer services on Jan. 1 each year, with tax payments not due until November, Koch said. Until those property tax dollars are collected, the amount of funding the county has available is limited.
Millburn said that last year the commission approved the issuance of bonds for the same amount.
The most the commission has ever borrowed in tax notes in any given year was $12.5 million in 2002, Koch said.
"Every year since 2002 there has been a steady trend down to this point," Koch said.
Because of the county's strong financial position and fund balances, it no longer needs to issue notes that large, Rawlings said.