COUNTY MAY FACE CUTBACKS; FUNDS MIGHT GO OUTSIDE COUNTY

JACKSON - The Cape Girardeau County Commission should have a good idea this week whether years of financial prosperity for the county are in jeopardy and plans for expense-cutting are needed.

"We've just got to do some soul searching around here," said Presiding Commissioner Gene Huckstep Monday.

"We've been pretty well spoiled the last few years. We seem to have had plenty of money, the sales tax was always up, and we got good interest on our money. Now, it looks like we're going to have to adjust."

Last Thursday, the county opened bids from financial institutions to determine its depository for the next two years and officials were stunned by what the bids offered.

Only two banks offered bids and instead of the 9.53 percent minimum interest rate the county had been receiving on large certificates of deposit, the best interest rate bid was 6.15 percent.

The county normally has at least $6 million invested at all times from county general revenue, the capital improvements account, and from funds invested for other entities in the county.

Huckstep said it is possible the commission will try to invest some funds outside the county to maximize interest.

Further complicating the problem is that Cape County's sales tax revenue - which provides all of the taxes that make up the county general revenue budget - is not showing any growth.

After receiving four checks this year for sales tax, receipts are running about 3 percent behind last year. Last month's check was the first one received this year that was higher than the same month a year ago, and the commissioners are anxiously awaiting the May check that is due later this week.

Besides the sales tax check, the commission is also waiting on a legal opinion from its attorney, Larry Ferrell, to decide what parameters it must operate under for investing county funds.

The commission must act prior to July 1, when the current depository agreement runs out.

"We won't take any action for a few days until we get some legal advice," said Huckstep. "We really don't know what we are going to do; we're still in a state of shock. We need to know what our legal parameters are before we take any action such as what the county's options are under these circumstances in light of the bids that we received."

One option the county always has in the bid process is to reject all bids and ask for a re-bid, but Huckstep said he is unsure whether that would accomplish much in this situation.

The presiding commissioner explained that an option would be to keep the county's checking accounts in either Capital Bank or Boatmen's Bank, who were the two bidders last week. Checking account balances are generally kept at minimum levels and the bulk of the interest is earned on large certificates of deposit.

Under that plan, the bulk of county funds would be invested outside the county. "I have no problem going outside the county as long as it is federally insured," said Huckstep.

He admitted taking funds outside the county might be controversial to some, but he pointed out local banks take the money they receive in deposits and invest a large part of it outside Cape County.

"We've got to do what we've got to do," said Huckstep. "We're talking about several hundred thousand dollars of revenue here, and a major chunk of that goes into our road and bridge program. If we can't get a higher rate, that money for the road and bridge program will have to come from another place."

All of the interest the commission earns on general revenue funds that are invested in certificates of deposit is applied to roads and bridges, and much of the interest from the capital trust account is used for new road equipment.

Huckstep said the commission has been discussing contingency plans that might be necessary to cut expenses during this time of declining revenues.

"This is no different than the person with his family budget," said Huckstep. "You don't spend it if you don't have it. We'll just have to see how it goes. We should have a better idea by the end of this week or sometime next week on what action we need to take."