Sedgwick County officials warn state tax bill's bonding provision could increase local borrowing costs

A county finance official warned Wednesday that language in a pending state bill could lower Sedgwick County’s credit standing and raise borrowing costs for local governments.

The official said the county’s municipal adviser modeled the effect on a roughly $11.6 million bond sale and concluded a downgrade could cost the county about $750,000 more in interest on a $10 million issuance. “We would expect to pay $750,000 more just by virtue of that credit rating downgrade,” the county finance official said.

Why it matters: county officials said the bill’s date limits on what the county described as a full faith-and-credit exception could constrain future bonding capacity and translate into higher debt-service costs borne by taxpayers or reduced service levels if the county does not raise its mill levy. The finance official said the county provided suggested “gold standard” language to state negotiators that would address the county’s concern.

Commissioner Howell, who led the county’s legislative discussion, said lawmakers continue to try different bill vehicles and pointed commissioners to several measures being tracked at the statehouse. “That’s the one to watch,” Howell said of a bill expected to be considered that day.

County staff urged clarity on the specific bonding language. The finance official explained the policy stakes for credit-rating agencies: full faith-and-credit pledges give buyers the highest assurance they can compel a taxing authority to raise property taxes if needed to cover debt; inserting date limits or exceptions can prompt rating agencies to lower a borrower’s rating, increasing interest expense.

Next steps: staff said a more detailed financial analysis will be circulated to the commission and that the county has asked the state to adopt the county’s proposed language. No formal action on the matter was recorded in the supplied transcript excerpt.

Sources and attribution: quotes and figures are drawn from remarks by a county finance official (transcript speaker S5) and Commissioner Howell (transcript speaker S7).