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Counties wrestle with stimulus temptation

Paul Snyder
paul.snyder@dailyreporter.com

Debt-shy Wisconsin counties are cautiously considering federal stimulus-backed bonding for projects on land that qualifies as a recovery zone.

The American Recovery and Reinvestment Act lets counties and municipalities declare economic recovery zones, which are areas dealing with high unemployment or poverty rates and little to no development. The local governments can then use federal bonds to finance new projects or job creation incentives in the designated zones.

Through the stimulus program, the federal government promises to refund 45 percent of the interest paid during a bond payback cycle, which can last up to 20 years.

“This would be a new concept for us,” said Kristi Kordus, Marathon County’s finance director. “We’re a conservative, pay-as-you-go type of government, and if we can’t afford something, then we don’t do it.”

Marathon County experienced a nearly 6 percent increase in unemployment between September 2008 and March 2009. That qualifies the county for more than $19 million in recovery zone bonds — $11.6 million for facility projects and $7.7 million for economic development projects.

Even with a good interest return rate, Kordus said, the bonds would put the county in debt. Yet it is a tantalizing opportunity, she said, considering the bonding could back construction and renovation projects, and it could offer incentives for businesses to move to the county.

Rock County is eligible for even more recovery zone bonding — $25 million. The county is still assessing possible projects that could benefit from the money, and the Rock County Board of Supervisors has not yet declared any land as a recovery zone, said County Administrator Craig Knutson.

If the board accepts the bonding, he said, supervisors should use the money for work the county already has lined up.

“If we can get that rate of return,” Knutson said, “it might be more economical to do the projects with this bonding than to do it with our own money.”

If counties use the money correctly, the benefits should outweigh the debt, said state Rep. Jerry Petrowski, R-Marathon.

“The goal here is job creation,” he said. “As long as you’re focusing on what needs to be done, I think this can be a positive thing. But the concern is always that the money might not be used for those kinds of needs.”

In Petrowski’s district, the Marathon County Board of Supervisors will make the call on how to spend the money. John Small, vice chairman of the county’s Education and Economic Development Committee, has a few suggestions.

“On one hand, we have a new terminal project going at the Central Wisconsin Airport, but we’re already on our own path for getting that funding,” he said. “So why shouldn’t we look at municipalities or other parts of the county where we’re not already looking?”

For counties struggling under heavy debt and facing cuts in 2010 budgets, Small said, the opportunity to accept federal bonds is less appealing. But in Marathon County, he said, it’s worth the investment.

“We need to get money into play,” Small said. “Even if you put $1 million toward something, you know some business is going to hire somebody to do something for it. We need to get dialed in.”

Petrowski said if counties can make the investments work, businesses and projects should generate enough money to pay back the debts. But he cautioned that spending just for the sake of spending is dangerous.

“There has to be a number of things in place — knowing what kind of marketplace you’re in and what kind of product you’ll be getting,” Petrowski said. “If you’re a bank, you don’t just give money to anybody that walks through the door and hope they can repay. You’ve got to know.”

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