Monroe County mulls $3 million in capital projects for yearly GO bond issuance, after concept gets kicked around in debate on local income tax increase

At last Tuesday’s meeting of Monroe County’s council, county board of commissioners president Julie Thomas presented a list of projects that could be funded using proceeds from a $3-million general obligation (GO) bond.

It’s a routine strategy for the county, each year to set property taxes at a high enough rate to generate enough revenue to cover the repayment of short-term general obligation bonds.

The list presented by Thomas for this year included: trucks and heavy equipment for the highway department; support vehicles for the highway department; parks ADA projects; replacement of core switches in the justice building; radios for sheriff’s office; handheld narcotics analyzer; county vehicle refresh; renovations related to office move by highway and surveyor; and trail connections.

On Tuesday, the list did not appear to generate any red flags for county councilors. Last year, commissioners proposed a $5-million bond that drew sharp enough scrutiny from councilor Marty Hawk that the list of projects was trimmed down to about $3.3 million. This year’s proposal will get more consideration in the next few weeks before a vote is taken.

The idea of issuing GO bonds to fund capital projects made its way into recent deliberations in front of the Bloomington city council, during its deliberations on a possible increase to the countywide local income tax (LIT). The council’s vote was 4–5, so the proposal did not achieve even the simply majority to move it forward for consideration by the rest of the tax council.

Pitching the idea of GO bonds to the city council two weeks ago, as an alternative to a LIT increase, was county councilor Geoff McKim. He disavowed support for raising taxes in the middle of a pandemic. But if taxes were to be raised, he wondered why the alternative of GO bonds had not received any serious public discussion.

McKim sketched out how some effort would have to be made, to ensure that just capital projects were funded with the GO bond proceeds.

McKim said, “Yes, some shuffling between budgets would have to be done so that only capital expenses would go into the bond. And capital expenses from other funds could be moved into the bond, freeing up operating revenue. But I could easily see a one- or two-year GO bond to raise enough revenue to make the climate change investments that I believe many on this [city] council support.”

An additional argument made by McKim for GO bonds, instead of a LIT increase, was based on whose taxes would be raised. If Bloomington issued a GO bond, the related tax increase would apply only to property owners in Bloomington, not countywide.

On that occasion, Bloomington mayor John Hamilton responded to the idea of issuing GO bonds first by giving an argument against them: Because issuing GO bonds would increase property taxes, the cost would be passed along to renters.

Hamilton also seemed unenthusiastic about McKim’s suggestion that some capital expenses, not directly related to the goals of the LIT increase, could be moved into the GO bond, freeing up money for operational expenses that were planned to be funded with the LIT increase. Hamilton said, “The city is really averse to using general obligation bonds for, even short term bonds, for operational expenses.”

Hamilton added, “Much of what we’re talking about in the needs here [i.e., the proposed use of the additional LIT revenue] are not long term capital. Some is.”

Hamilton’s characterization of the county’s approach to GO bonds raised some eyebrows among county officials, because he characterized the county’s use of GO bonds as paying for operational expenses: “The county has a tradition of using GO bonds for what we would consider short-term or even operational expenses. The city just does not like to do that. We don’t think it’s responsible. We have looked at that, but that’s not an approach that we would recommend.”

This year’s proposed GO bond projects by the county don’t appear to include operational expenses—they look like they’re confined to capital projects. A Square Beacon review of the ordinances issuing GO bonds over the last five years identified only projects that look like they’re confined to capital expenses.

Here’s the general summary of projects for this year’s county GO bonds:

Proposed 2020 GO bond projects (Monroe County, Indiana)