The Fibrant Autopsy Part III: Salisbury’s Shaky Bond Rating Due to Fibrant and Salisbury’s Fibrant Created High Taxes

Posted on April 16, 2018



Todd Paris,  RFP Contributor and Salisbury Attorney

♦ Salisbury’s Bond rating, which affects the interest we have to pay on borrowed money, took a big hit in 2014 due to the Fibrant debt and risk involved. We were downgraded to A3 from Aa3 on the city’s combined enterprise system revenue bonds.

https://rowanfreepress.com/2014/05/15/fibrants-moodys-low-bond-rating-well-deserved-fibrant-rocked-salisburys-limited-future/

https://rowanfreepress.com/2016/09/01/fitch-ratings-reports-salisburys-water-and-sewer-bond-ratings-remain-stable-only-if-salisbury-rowan-utilities-doesnt-support-fibrant/

https://rowanfreepress.com/2014/10/22/fitch-ratings-downgrades-salisbury-n-c-s-bond-rating-due-to-fibrant/

These ratings affected $30.5 million in rated debt.

As of April of this year Moody’s rated us A3 which is slightly better. It is clear from reading the report that the Fibrant problem still is an issue as far as spending general fund revenues on an enterprise fund that is losing money. They seem to like idea that a potential other party may be stepping up to the plate. I conclude they are talking about Hotwire. I conclude that if the lease had not been undertaken that we may have seen a significant drop in the city’s bond rating.

I wrote about this in an earlier article. NC cities and counties generally do better because we are not “home rule” and are just subdivisions of the state. That means all the taxpayers of NC are potentially on the hook for a cities’ financial collapse. Oversight by the State Treasurer and Local Government Commission and their legal ability to take over a failing city no doubt helps with stability. Credit should be given to those smart legislators that years ago passed laws to forbid “home rule” cities and thus ensure the financial stability of our cities and counties. Unlike Detroit, our cities don’t go bankrupt. Additional credit should be given to Republican State Treasurer Dale Folwell, who has been very involved in trying to ease Salisbury’s financial problems.

Crushing property taxes and some of the results of an interview with Councilmember David Post

David Post is an attorney and CPA elected to council over two years ago to serve with then Mayor Karen Alexander, Brian Miller, Kenny Hardin, and Maggie Blackwell. He has been re-elected since. David and I used be on a radio show, “Politics This Week with Jeff Morris” which used to air on the State House Representative Carl Ford’s radio station. He’s smart with the numbers. I have found that if you ask him an inconvenient question he will not lie to you. He will either refuse to answer or draw your attention away to another subject.

Since he was elected to council, David exposed some of the major financial problems the city had with accounting and auditing and exposed plenty of inconvenient truths to force council to face and try to come up with a solution to the Fibrant problem. He has become more effective with current council members Tamara Sheffield and Mayor Heggins.

With at least three votes out of five committed towards fixing this problem, more information has been shared. It always seemed that all the city councils that were in place till now were more committed to hiding the impending disaster and “kicking the can down the road.”

In my last phone interview with Councilmember Post, I discovered some new information. Salisbury’s tax rate is now just short of 71 cents. That’s higher than any city, in any county near us. Go look yourself. (Click on Chart to Enlarge)

https://files.nc.gov/ncdor/documents/files/2017-18taxrates.pdf

Other than a few small towns that have undergone large population decreases, few NC cities have a higher tax rate than Salisbury. A pretty knowledgeable guy in politics told me that a property tax rate higher than 70 cents is considered to be the equivalent of a star flare fired off the stern of the Titanic just as the nose slipped under. You just don’t do it.

Here’s another epiphany from David Post. A full 12 cents of the current tax rate goes to prop-up Fibrant! That’s right (and I specifically asked) if Susan Kluttz, Paul Woodson, Pete Kennedy, Mark Lewis and Bill Burgin had not voted to build Fibrant would our tax rate would be a measly 59 cents? Yup! Granted, as soon as the writing was on the wall they all retired from politics, but they need to own this horrible decision.

Tune in for the next installment! “Should we allow our Fibrant truck to be Hotwired and driven away?” Coming soon in Rowan Free Press!

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