Gridlocked: York County secures $20 million loan

Written by Flint McColgan/York Daily Record-Sunday News | Oct 22, 2015 12:13 PM

(York) -- The uncertainty over when the state will pass a budget has forced York County to pursue a $20 million line of credit.

The county revealed earlier this month that it has been "back-filling" some services traditionally funded through state money with its own general funds. On Wednesday, York County Administrator Mark Derr said he predicts the county could withstand this setup through mid-November.

Wednesday was day 113 without a state budget.

The reason the county has decided to take the line of credit now, county spokesman Carl Lindquist said, is because there is a delay from when the state establishes a budget and when the county will start receiving checks from that budget.

The county receives $70 million annually from the commonwealth for state-mandated services, Derr said earlier this month.

Here's what you need to know:

ANTICIPATORY>> The credit line is a form of a Tax Revenue Anticipation Note. The county regularly takes such loans at the beginning of each year, Lindquist said, to fund needed services before property tax revenue comes in. That tax revenue is then used to pay off the loan.

DRAWDOWN>> The line of credit, established with Lancaster-based Fulton Bank, is of the "drawdown" variety. This means the county can withdraw sums from the account as needed and will only pay interest on the amount of money they actually use. It will not be a lump-sum loan.

LOW INTEREST RATE>> Fulton Bank offered the lowest interest rate, 1 percent, out of all the banks who bid on the credit line, Derr said.

Commissioner Chris Reilly cited the county's increased bond rating of AA-stable to be the reason such a low rate could be secured.

CAN BE CANCELED>> It's easiest to think of the drawdown credit line as a credit card, Lindquist said. If the state establishes a budget and funds from the line are no longer needed, the credit line can be canceled like a credit card without penalty.

This article comes to us through a partnership between York Daily Record and WITF.

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