county needs to come together geri byrne modoc 031812

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County needs to come together

Modoc’s financial issues similar to other counties; work must be done

by GERI BYRNE, Herald and News Guest Commentary 3/18/12

Modoc County is no longer alone with its fiscal crisis. Rural counties across California and Oregon all share a similar dilemma. Too much government owned ground, too little tax base and too many mandates from Sacramento, Salem and Washington, D.C. Add this to a poor economy with high fuel costs and greater need for services by its residents and it all leads up to a perfect recipe for financial disaster.

Modoc County’s problems began many years ago when the county went into debt to keep the county hospital operating. To do so, restricted funds were used, and because of this, a current hole of $13-plus million exists.

Replaces used funds

The money needs to be put back, yet there are no easy options to do so. The state rejected the audits going back to 2007-08, making several financial options unavailable. The previous Board of Supervisors was looking into bond sales to cover the deficit, but given the poor financial record of the county, interest rates and transaction costs were too high to make this feasible.

The current Board approved a budget that implemented cost reducing measures until more long-term measures can be achieved. This included furloughs in many general fund departments, and cuts to some departments that had not received them in prior years.

With a poor economy, crime rates have risen, and so our public safety departments were spared many of the cuts other departments received. In addition, the plan includes the possible sale of fixed assets, mitigating cash flow threats in waste management and the library and addressing compensated absences liability.

In July 2011, the county received an informal written quote for a partial financing at 12 percent interest and with high fixed transaction costs. After the county plan was passed, and federal rates were stabilized, the county was apprised that a transaction in the 8 to 9 percent range would be possible.

In February 2012, the county received an informal written quote for partial financing with a much more feasible interest rate of 6 percent. Given these more affordable rates, a partial financing to meet cash flow needs undoubtedly will be part of the solution. Even with this, a full restoration from financing and sale of fixed assets is not likely to happen. The county also will need to rely on negotiations with the state as part of the solution.

Attacks don’t help

None if this is simple. The Board is attacked both from within the county government structure and from out in the public. Sentiments run high. Comments on blogs and letters to the editor often are overly simplistic and in response to rumors and half-truths instead of facts. Many are guilty of spreading discord and dissension, which does nothing to advance a solution. Some believe full financing is the only solution, although that is not economically feasible. Some feel the county should pursue bankruptcy, despite the multi-million-dollar price tag and the fact that at the end of the day, municipal bankruptcy does not really solve the problem. Turf wars are going on when we all need to be pulling together to meet Modoc County’s needs.

As a new supervisor who has inherited this problem, I feel I come into this with a fresh look. After being on the Board for 14 months, and somewhat frustrated by the process (or lack thereof), I would ask that we all try to be more professional and work together to come up with answers for Modoc’s problems. We in Modoc are not alone in our fiscal crisis, but how we choose to deal with it can set us apart.

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