The Record Newspapers - Hometown News For Orange County, Texas

Orange County Commissioners took steps to avert a possible cash flow problem between now and the first of the year this week. Judge Carl Thibodeaux and County Treasurer Christy Khoury have been in talks with Wells Fargo for an issuance of $6 million Orange County Tax and Revenue Anticipation Notes, Series 2012.

Thibodeaux made it clear the county is not in trouble, but may experience a shortfall in cash flow between now and Dec. 31. “The county’s fine, it’s not like we are going bankrupt. We are not going broke,” he said.

Most of the county’s income comes in the first three months of the calendar year in the form of property taxes. The budget crunch this year has made the cash situation tight the first three months of the county’s fiscal year and Thibodeaux said there are several large commitments coming up between now and Dec. 31.

Commissioners are taking these preemptive steps now because unlike a business taking out a loan; the action has to be approved by the state.

Thibodeaux said, “To be on the safe side I requested a meeting with Wells Fargo Bank with their governmental loan officers, their governmental attorneys and their governmental economists that handles any type of governmental products from their bank.” Thibodeaux said he and Khoury met with them both in a conference call and in person. The county attorney has gone over all the paperwork. Interest on the loan will be $85,000 through March.

“The issue in Orange County is, we pay cash for everything,” said Thibodeaux. “It’s a double edged sword. We don’t owe anybody a penny, but it takes away your operating capital when you do it that way. You’re proud of doing it one way and it bites you in the other.”

According to Thibodeaux, the state was actually surprised the county has no debt.

Thibodeaux said he does not foresee needing the entire $6 million, more likely $2-3 million. What is not used will be returned to Wells Fargo. The county will receive the loan at an interest rate of 3.99 percent.

“You don’t wait to the last minute when you see a red flag come up,” said Thibodeaux. “We’ve been working on this even during the budget time. I got concerned about it, so I set the procedure in motion to see what was out there for Orange County based on the taxes.”

“We’ve got major commitments coming up between now and Dec. 31. You’ve got to pay your bills. Right now there is money in the bank, but it is going to go out quickly because of the large bills we’ve got coming up.” Thibodeaux says it looks like there’s a lot of money in the bank, but $2 million of it is restricted funds that can’t be spent on anything except for what they are designated.

Wells Fargo has reviewed three years’ worth of Orange County’s financial records and approved the loan.

Thibodeaux said commissioners will be setting in place austerity measures the next 12 months to assure this problem doesn’t happen again. “If it’s not resolved in the next 12 months, then we have to show a plan that it is going to be resolved in a certain length of time.”