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Smyth County approves up-to-$5 million revenue-anticipation note to manage cash flow
Summary
The Smyth County Board of Supervisors approved a resolution authorizing a revenue-anticipation note (a line of credit) with a maximum principal of $5,000,000 to address midyear cash-flow timing, with the note required to mature within a year and interest capped in the resolution.
The Smyth County Board of Supervisors on July 23 approved a resolution authorizing issuance and sale of a revenue-anticipation note with a maximum principal amount of $5,000,000 for the fiscal year ending June 30, 2027.
S9, reporting the budget committee's recommendation, read the resolution’s key terms: the county may issue a single registered note dated on its issuance, the principal shall not exceed $5,000,000, the note must mature no later than June 30, 2027, and the interest rate “shall not exceed 5.5%.” The resolution also pledges the full faith and credit of the county and requires nonarbitrage and tax covenants to comply with the Internal Revenue Code, the reading said.
Opposition and concern came from board member S5, who criticized the plan to borrow to cover shortfalls. S5 said the county’s cash flow problems reflected deeper spending and accountability issues, arguing that “1% on $5,000,000 is not minimal” and that borrowing to pay routine county bills raises stewardship questions. Chair (S1) and other officials responded that the resolution authorizes an available safety measure and that past practice included maintaining a line of credit as a contingency during months when revenues lag.
The record and committee briefing noted legal authority for the action in the Virginia Code cited in the reading (transcript references to section 15.2-2629 and related provisions) and that the county may make incremental drawdowns rather than being required to borrow the full authorized amount. County staff also reported that county counsel (referenced in the record as Don Martin) reviewed the draft and confirmed key constraints, including that principal cannot exceed anticipated revenue and that no public hearing would be required to adopt the resolution.
The board took a roll-call vote on the measure during the meeting and adopted the resolution by majority. The board recessed after the vote to continue remaining items on the third floor.
