Hurricane Katrina

Refinancing may keep county afloat

BAY ST. LOUIS - Refinancing about $14 million of the county's debt would prolong insolvency but it could give the county some hope at avoiding bankruptcy altogether, according to some officials.

Steve Pittman, who runs Government Consultants Inc. in Jackson, recommended refinancing to buy time while Hancock leaders figure a way to rehabilitate the Katrina-crippled county.

A new $14 million loan, mostly to cover old road-improvement bonds and a hospital bond from last year, would mean the county would not have to make payments on the debt for months, maybe even years.

"It could get us through this crunch," said County Administrator Tim Kellar. "But in the long run, we're going to end up paying for it."

Refinancing would give the county some breathing room. On the other hand, the deferred loan would accrue interest, and the county would eventually pay a lot more than it's currently paying.

What's more, refinancing the road and hospital bonds would only slow payment on a portion of the county's total debt load, which is nearly $40 million.

Kellar and other county leaders say the refinancing option is a "backup plan," and they still have a few more stones to turn before it's put into action.

"Just in case we don't get the support from Washington or Jackson, it's recommended that we get the paperwork in place and be ready to go," Kellar said.

County officials met with Gov. Haley Barbour this week in Jackson to discuss a bailout and although some said they were confident help is on the way, others are far more skeptical.

"We need to know if the state is going to help us or not," Kellar said. "If not, then we need them to put it in writing so we can take our plea to Washington."

The county has spent more than $26 million on Katrina-recovery work, which the federal government will reimburse. But so far, less than $10 million has hit the county's bank account.

Hancock needs the wheels of assistance to spin a lot faster. If FEMA sends reimbursement soon, local bookkeepers say the county should run out of money sometime early next year, but the county would face insolvency much sooner if the money is delayed.

Last month, the county said its fiscal future was less bleak than it first estimated.

The most recent projections show the county facing a $2 million gap this year, far less than predicted. But in 2007, the county could end up more than $12 million short of funding its budget.