The long-term consequences of putting off paying a major debt so Fulton County can balance next year’s budget won’t be as painful as previously thought.
To avoid an upcoming $17.6 million payment, county leaders refinanced nearly $140 million still owed for 1990s-era Grady Memorial Hospital improvements. While the move helps balance Fulton’s 2013 budget, staving off severe service cuts and keeping the countywide tax rate down, some commissioners criticized it as a quick fix that would have taxpayers suffering in years to come.
But the bond underwriter has since negotiated a better interest rate — 2.47 percent instead of 4 percent — and it makes a huge difference. The County Commission approved the refinancing terms in early November.
The debt dates back to 1993, when Fulton and DeKalb counties issued $336 million in bonds to fund a massive Grady renovation and expansion project. The two counties are the hospital’s biggest benefactors, contributing tens of millions of dollars each year to cover costs of treating poor and indigent patients.
This is the fourth time Fulton has refinanced its portion of the debt. DeKalb isn’t taking part, its commissioners opting against increasing the county’s obligations.
Fulton’s new payment plan no longer adds $32 million to the total payback cost or has rapidly increasing installments in later years. The overall cost increase is now $5.2 million, and annual payments will be stretched out by one year to 2023, not to 2028.
Commissioner Robb Pitts, who objected the loudest, still opposes the refinancing. The county is still “kicking the can further down the road” to avoid tough decisions on service or personnel cuts, he said.
“As it turned out, it just so happens that the timing was good for us,” Pitts said.
David Corbin, managing director of underwriter Terminus Securities, said the county’s high credit ratings and reputation for sound financial management helped in talks with large creditors.
“The market got better,” Corbin said, “and then through the negotiation process, we were able to hone it down.”
Fulton leaders, mindful of a Republican-dominated state Legislature aiming to shrink their scope of power next year, have been working to rein in costs and avoid hiking taxes. Putting off Grady debt payments is viewed as buying time to adjust spending, and eliminating $17.6 million next year is one of many ways Fulton is balancing a projected $569.4 million countywide services budget.
An early plan presented in November by Finance Director Patrick O’Connor also would reduce most departments’ budgets by 2 to 5 percent.
Support real journalism. Support local journalism. Subscribe to The Atlanta Journal-Constitution today. See offers.
Your subscription to the Atlanta Journal-Constitution funds in-depth reporting and investigations that keep you informed. Thank you for supporting real journalism.