The Fayette Citizen-News Page
Wednesday, December 1, 1999
Funding options tough to pin down

By DAVE HAMRICK
Staff Writer

If Fayette County enacts a special sales tax to pay for a new jail and judicial complex, the average three-person household will pay about $1,500 over the five-year life of the tax.

Maybe.

The figure is based on some economic assumptions that may or may not prove accurate, says county finance director Emory McHugh.

McHugh put together a complex table of predictions based on a variety of different scenarios that the County Commission will refer to as it discusses financing options for the complex today in its monthly work session.

The $1,500 figure is based on an econometric model that assumes local residents will pay about 70 percent of the sales taxes, while nonresidents shopping here will pay about 30 percent. Among other assumptions in the model are a 3 percent inflation rate, a growth rate of 3,500 new residents per year, a 5 percent growth in the tax digest and a cost of $70 million for the construction projects, all of which may or may not be accurate, said McHugh.

“That's why I gave them a range rather than a single assumption,” he said. “There's no way to be sure of anything.”

McHugh provided predictions of cost per family based on a range of local contributions running from 65 percent to 90 percent, and came up with a total cost to the average family that ranges from $1,392.87 to $1,928.61 for a special sales tax.

By comparison, a general obligation bond would cost about $1,750.59 per three-person household, spread over 30 years. Bonds issued by a special public facilities authority would cost $1,296.04 and if the county obtains funding under a Certificates of Participation program, the cost would be $1,315.46.

Those figures also are based on current interest rates for the various types of bonds, and McHugh was careful to point out that those rates fluctuate daily.

If county property taxes are increased to pay for any of the bond options, residents can deduct those taxes from their state and federal income taxes, reducing those costs further. Reduced by an average income tax deduction, residents would pay about $1,155.39 for general obligation bonds, $855.39 under an authority, and $868.21 using COPS.

The numbers would vary widely, depending on such factors as the value of a family's home, and how much retail sales the county will experience in a given year.

“I just did my best to give them a variety of answers based on a variety of different assumptions,” said McHugh.

Commissioners will study all of those estimates and the assumptions that go along with them, contained in a 25-page report, as they continue to ponder the issue of how to pay for the project. They meet today at 3:30 p.m. at the County Administrative Complex, 140 Stonewall Ave., Fayetteville.


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