CROWN POINT | Lake County officials want to assure the public that county government can handle its debt — even though it already owes creditors more than $100 million and is about to borrow more.
A recent Indiana Department of Local Government Finance publication reports Lake County government has outstanding debt obligations exceeding $111 million in principal, interest and lease payments.
Early next month, the Lake County Council will mull a proposal to borrow an additional $15.5 million next year from neighboring Porter County to meet anticipated spending on the county jail, its roads and drainage waterways and other services.
Lake County officials said state-mandated limits on the amount of taxes they can collect from local property owners requires them to either borrow, cut essential services or impose a local income tax.
Porter County Treasurer Mike Bucko said last week he read about Lake County's dilemma and offered to lend the money from a $173 million reserve that county amassed from the sale of the Porter Memorial Hospital.
However, some who live in Porter County question whether that is too much of a risk given Lake's financial problems.
James A. Shanahan, an attorney who oversees Lake County's forays into the private bond market, said Porter County residents should rest easy.
"There hasn't been a payment failure by Lake County yet," Shanahan said. "We have accessed the markets several times in the last two or three years for $5 million, $10 million, $15 million. In each case, we have received more than one bid and done as well or better than expected."
He added, "Porter (County) officials are in a situation where they can help, and they come out ahead, too."
Porter County recently lent several school districts money at 1 percent interest when the private market was charging as much as 1.15 percent. He said Porter received a better return on its money than the one-third of 1 percent it would have received by investing in U.S. Treasury bonds.
Larry Blanchard, an administrative assistant to the Lake County Board of Commissioners, added, "We would have to pay it back. If we didn't, they would take the money from us."
Although Lake County owes $111 million in principal, interest and lease payments, that only amounts to $224.32 per resident, according to the state report. Porter County has $39.7 million in outstanding obligations, but its per capita debt is slightly higher than Lake's at $241.67.
Lake County Attorney John Dull said once the Lake County Council approves the borrowing, the Board of Commissioners will decide whether to choose Porter or the private market for the loan source.