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Finance staff flags arbitrage risk on bond proceeds and proposes tracking to accelerate pay‑apps
Summary
County finance presented first‑quarter financials, capital spending and cash‑flow forecasts. Staff warned of an arbitrage rebate exposure tied to proceeds invested at yields above bond yields and said they will accelerate contractor pay applications to reduce risk and update the board on reserve policy.
Finance staff presented an overview of first‑quarter finances and capital spending, focusing on what remains in the county’s sales‑tax (SPL) and bond proceeds and how timing affects arbitrage rebate exposure. The presentation noted that some earlier bond proceeds earned investment yield that could trigger an IRS arbitrage rebate if not spent within statutory timing rules. Staff said they are tracking pay applications closely and plan to accelerate payments where appropriate to reduce potential rebate liability.
The finance report covered operating and joint project funds, first‑quarter capital outlays (buildings, infrastructure, roads and bridges), and a forecast of available cash for current projects. Staff described fund‑balance calculations and noted the county’s reserve policy (one‑third of prior year budget) and a staff recommendation to consider increasing the policy target.
Commissioners asked for periodic cash‑flow projections tied to the county’s special sales‑tax receipts and for clarity on timing assumptions related to recently announced supplemental state grants and SPL receipts. Finance staff agreed to provide a cash projection showing months when liquidity tightness is most likely and to return with recommendations on reserve policy timing and possible adjustments to project timing to mitigate arbitrage exposure.
No formal policy changes were adopted during the work session; staff will bring a detailed cash‑flow projection and recommendation to a future work session.
