The Fulton County government is taking out a short-term loan with a record-low net interest rate, saving taxpayer dollars and inching the county closer to closing next year’s projected budget shortfall.
The commission voted Wednesday to issue $120 million in tax anticipation notes, a routine, short-term loan to tide the county over until property tax bills come due this fall. The county will pay a net interest rate of 0.18 percent.
Finance Director Patrick O’Connor said it’s the lowest rate ever received by a Georgia city or county. “It’s almost giveaway money,” he said. “It’s even stunned me.”
The net interest rate represents the cash a government pays in interest on a loan. By comparison, Cobb County issued $110.25 million in tax anticipation notes in March with a rate of 0.29. Bartow County got a 0.6 percent rate on a $12 million loan in February.
Georgia State University public finance professor Michael Bell, a former chief financial officer for DeKalb County and Atlanta, said O’Connor’s statement about a statewide record would be difficult to verify. Municipal interest rates have been falling as panic subsided over a report issued last year by banking analyst Meredith Whitney, saying governments would default on debts this year.
Fulton’s rate came from Bank of America, the lowest of nine bidders who sought to handle the loan. With a payback date of Dec. 31, Fulton will pay $109,400 in interest, compared to the $181,067 paid last year on a $120 million loan through Wells Fargo.
The payments will also be significantly less than what was budgeted, putting about $1.3 million extra in reserves for 2012, O’Connor said. He credited the county’s stellar short-term credit ratings from Standard & Poor’s and Fitch, as well as finishing 2010 with more than $156 million in reserves.
Commissioners gushed over the news before voting to approve the loan Wednesday. Tom Lowe said he’s tired of state lawmakers calling Fulton’s government dysfunctional, then went on praising the county’s financial management for so long that Chairman John Eaves cut him off for exceeding his speaking time.
House Majority Whip Edward Lindsey, R-Atlanta, a frequent critic of the Fulton government, said its coffers are well-stocked because of a strong commercial and industrial tax base. And while more than 90 percent of the county is now part of one of 14 cities, the county government hasn’t shrunk accordingly, he said.
“We are talking about a bloated government, one unresponsive to its citizens,” Lindsey said.
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