During the last several months Daviess County officials have been discussing creating an annex building to give the county more space for operations. Paying for the project has been part of the discussion, but with $10 million sitting in the County Gross Adjusted Income Tax coffers, officials see a way to build or renovate without causing taxes to go up.
That $10 million cushion got a little smaller when the county decided to spend $2,255,000 to retire two Economic Development bonds in late March, but the county expects to save $500,000 in interest payments, plus free up another $520,000 a year in Economic Development Income Tax money.
In all, Daviess County has more than 100 funds. Some of those funds have money coming from specific places like income taxes or gas taxes or court fees or direct payments from the state. Some of the money can be spent for about anything. Some, by state law, can only be spent on specific things.
Even with the recent payout in CAGIT monies, Daviess County still has at least $10 million it is holding onto, without a specific plan for spending it.
For instance, the county has $1,982,000 in a Rainy Day Fund. More money is stashed away in a Riverboat Fund. Daviess County has more than $500,000 in the 911 Fund, but that money can only be spent for specific things related to emergency communication systems.
"Those are reserves," said President of the Daviess County Council Mike Sprinkle. "You just don't know when you are going to have an emergency. It is good to have that money available to reach into in case we have something catastrophic like the levee breaking. It is there for special needs. We used some of the riverboat money last fall when we ran out of gravel. It is just good to have a reserve."
Daviess County is not alone in setting back funds.
"I would say that altogether we probably have about $10 million in reserves," said President of the Knox County Council Bob Lechner. "We have $4 million in the Rainy Day Fund and more in other funds."
Where Daviess County surplus has been built mostly on CAGIT, which can be spent on about anything the council wants to appropriate it for, Knox County has relied on the County Option Income Tax (COIT), which required a percentage of the money collected to be used as a property tax replacement fund.
County officials say they have been trying to build reserves, not just to deal with potential emergencies, but also to keep the books balanced when revenues begin to fall.
"When we have had money left over at the end of the year we have saved it," said Sprinkle. "Our consultants are recommending that. With the impact of tax caps and changes coming in farmland values set by the Legislature, we see some shortfalls coming. It hasn't hit us yet, but we are preparing for it."
"We built our reserve getting ready for lean times," added Lechner. "They did not hit as early as we expected, but we are dealing with them now. We never saved that money to just see how much we could build up. We are getting hit now with growing costs. The public defender costs are out of control. We are spending $1.25 million alone on that."
Another county looking at some potential public construction is Greene County, where jail space has become a premium because of a change in state law that has people convicted of low level offenses serving their sentences at the local jail.
"We are in the process of trying to add on to our jail," said Greene County Council President Jerry Frye. "It will cost us several million dollars to do that. We probably have around $10 million in reserve, but I don't think the council will spend it all on the jail. You need to have some reserve. By doing that, we can protect our bond rating and that will help us get a better rate when we bond the jail construction."
Frye says Greene County has taken a conservative approach to spending to try and build the reserves.
"We have money available in the Rainy Day and EDIT accounts," he said. "It takes a while to build those up, and state law limits what you can do with them."
Frye believes county officials have to walk a line between what is fiscally responsible and the "what ifs" of running a county.
"What if we have the heating system go out of a building or a fire hit the Highway Department," he said. "We need to have some money on hand to take care of that. We are self-insured on health insurance. What if we have a few more people come down with serious illnesses."
Daviess and Greene County officials also have another "what if" facing them. What if the exits along I-69 begin to develop and attract large business and industry that needs infrastructure upgrades?
"That money will be handy as the infrastructure needs grow," said Sprinkle. "Nobody knows what this county will look like in 10 or 15 years because of the growth along I-69. I would rather be pro-active and ready to go, than be reactive and miss out on a good opportunity."
"For years we have seen the coal mines and other businesses leave Greene County," added Frye. "We are working on economic development. We have a good chance to land a hotel at I-69 near WestGate. We are trying to bring more jobs in that area."
Local officials say they feel that counties holding millions in reserve may be more of the exception than the rule.
"It's really a never-ending challenge," said Lechner. "I see those reserves as something positive. I see how tax caps are affecting us and hear how other counties are talking about lay-offs and having to build new jails. I think Knox and Daviess County are the exception."
Even with projects proposed and possibilities in the future, Daviess County is considering getting rid of one tax in the near future. The county has a special 0.25 percent CAGIT to pay off the county jail. Officials expect to have enough money in that account to cover the payout this fall.
"Once we pay off the jail bond the taxes will go down," said Sprinkle.