At a budget hearing, Delaware County Treasurer Brad Polk told council members he has spoken with two local banks about either a line of credit or a tax-anticipation warrant to manage potential short-term cash flow gaps.

Polk said the tax-anticipation warrant offers fixed interest rates, while a line of credit would carry a floating rate tied to the Federal Reserve. "The line of credit would be a floating. They based it off of what the Fed's rate is," Polk said. He said banks indicated interest would depend on how much the county sought to borrow and that banks would want to see cash-flow projections and a final draft of the budget before giving specific rates.

Why this matters: the county relies on seasonal revenue streams and twice-yearly tax draws; a short-term borrowing option could cover timing gaps in receipts without forcing immediate cuts or changes to service delivery.

Polk said both banks described an application fee to open a line of credit but that there would be no ongoing maintenance charge if the county did not draw against the line. "After you pay for the application fee, there's no ongoing charge just to — no," Polk said. He added that interest would be charged only on amounts drawn, not on the full size of an unused line.

Polk warned floating-rate borrowing would vary with Fed rate changes but said a cap could be negotiated. He also said banks had expressed willingness to consider multiyear arrangements and requested updated financials before providing pinpoint interest terms. "They're both going to get me more information as we progress on this, and then I will get it to, obviously, the council as soon as I get it," Polk said.

Council members asked procedural questions. One member noted that tax-anticipation warrants require public hearings and a legal opinion for the bank; Polk confirmed banks expect an opinion of counsel to be furnished and that local law firms could provide that opinion.

No formal action was taken. Polk advised the council that opening a line of credit was an option to preserve cash flow and that any decision about selecting a bank or proceeding should be referred to the finance committee or returned to the full council when bank proposals are available.

The treasurer said the county would not likely need to use either borrowing option immediately; it could preserve the option for the coming year if needed.