Benton County officials weigh cost of courts building

BENTONVILLE -- The question of how to pay for a new circuit courts facility remains unanswered as Benton County officials debate where to build it.

"You may want that $150 million yacht. But if you don't have the income to pay for it you won't have it long. At some point we have to consider how much we can afford to pay," said Kurt Moore, justice of the peace.

The Finance Committee heard a brief report on a possible funding method at its July 7 meeting -- issuing bonds under the state's Amendment 78, with the costs to be paid with anticipated growth in county property tax revenue.

Brenda Guenther, comptroller, said Amendment 78 allows counties to issue bonds on their own authority, with no voter approval required. The bonds must be repaid within five years, she said.

Representatives from Stephens Inc. provided the committee with information on bond issues that would raise $12.5 million for construction, $15 million for construction and $17.5 million for construction. According to the information provided to the committee, the annual debt service would range from about $2.6 million for the $12.5 million bond issue; about $3.1 million for the $15 million bond issue and about $3.7 million for the $17.5 million bond issue.

The county projects its property tax revenue to jump about $1.5 million from 2015 to 2016 due to the state-mandated reappraisal. The property tax revenue would be expected to grow by about $500,000 in a year with no reappraisal, Guenther said.

Moore isn't in favor of a five-year bond issue because of the higher payback required.

"Why would that be better than just going to the bank and getting a loan?" he asked.

Moore suggested a longer-term bond issue still could work with the property tax revenue as a payment source. While a longer-term bond issue would require voter approval, Moore thinks pledging to use county revenue would make it more likely to gain voter approval.

"We could, perhaps, do a bond issue based on the amount of property tax increase from the reappraisal going forward," he said. "If we did a 20-year bond based on that it would seem to be relatively painless. It's money we don't have now, but we will be getting in the future. I think if you couched it to the people in those terms, that we were just pledging money from property tax revenues they are already going to be paying, there's less of a chance you'll have problems."

Pat Adams, justice of the peace, is a proponent of a one-year, 1 percent sales tax increase. Adams said the sunset provision and the relatively short duration of the tax combines with the growing tourism economy to make it less painful for residents. He also said the additional revenue from the property tax reappraisal will more than likely be eaten up with growth in personnel and other costs for the county.

"Everybody's screaming 'We're not going to raise taxes,'" Adams said. "But the money from the reassessment is basically already gone. In new personnel alone we just approved close to a million dollars in new positions. I hate taxes as much as anybody, but I think we've got to be realistic about it."

Estimates show a 1 percent sales tax across Benton County would raise about $36 million in a year, Adams said. That would pay the full cost of some projected courts buildings, he said. Also, a sales tax shifts some of the cost on visitors to the area, Adams said.

"They say we have 5 million visitors to Beaver Lake every year," he said. "Those people are spending money here. They're going out to eat, they're staying in hotels, they're buying gas. With the amount of tourism we have it's going to generate a lot in sales tax revenue. If you have 40 percent of those people coming from outside the county, that's just 60 percent of the tax burden on county residents. That's a bargain."

Joel Jones, justice of the peace, said he's uncertain about financing, but he wants to have the study the county is doing on locations and building size to at least consider possible budget limitations.

"In our discussion the other night I asked Mr. LeBoeuf [Michael LeBoeuf with Dewberry Architects] what do we do if we want to put some parameters on it?" Jones said. "What do we do if we know we have just so much money? Can we scale it back? He indicated that they can do that and it seems to me at some point we will have to do that. We've talked about spending $25 million on the building. We've got maybe $10 million in the bank we can use for this so we've got to come up with another $15 million or maybe more. We've got to figure out where we want to go and what we want to build. Then we've got to ask 'What does it look like at $25 million?'"

Barry Moehring, justice of the peace and the Republic Party nominee for county judge, said his first choice will be a funding mechanism to avoid any tax increases, whether it relies on the anticipated property tax revenue increase, growth in sales tax revenue, self-imposed budget restraints or any combination of those and other sources. Moehring also said he doesn't favor the issuing bonds or taking other action to go into debt without seeking voter approval, even if it's not required by law.

"With the county taking on a significant debt, it feels right to me to have taxpayers have a vote in that," he said.

Tom Allen, chairman of the Finance Committee, said he's trying to keep the funding issue in everyone's minds as they work on location and building concepts.

"I just want to make sure everybody's well informed, so whatever location they're thinking about for the building they'll also know what options are available for funding the project," Allen said.

Allen hasn't settled on a preferred method for funding yet, but said he wants to try to avoid new taxes.

"If we can self-fund this, without having to go for a tax increase, that's my preference," he said.

NW News on 07/18/2016