Experts urge caution with line of credit

By By Chris Allen Baker/staff writer
Jan. 25, 2002
Economic experts in Mississippi urged Lauderdale County supervisors to use caution if they establish a $5 million line of credit with the state to fund capital improvements.
Business and economics professors at Mississippi State University, the University of Mississippi and the University of Southern Mississippi say the credit could be a good resource.
County supervisors voted two weeks ago to apply for a $5 million line of credit with the Mississippi Development Bank. Once established, the county could borrow money at 2.95 percent interest.
Supervisors identified more than $8.3 million in potential needs for the $5 million line of credit including $3.5 million for road improvements and $1.9 million for road equipment.
Some residents oppose the move, fearing it could cause a tax increase despite the low interest rate. A group of residents is circulating petitions to force a countywide vote on the issue.
William F. Shughart, chairman and professor of business administration at Ole Miss, had his own take on the issue. Shughart said everything depends on how the money is spent.
County Administrator Rex Hiatt has mentioned the need to renovate the law library. That, however, was not part of the $8.3 million in needs supervisors identified.
Shughart said the credit is a good resource because the interest rate is better than a normal loan. Despite that, he said, officials are likely to spend whatever money "they have access to."
Counties have needs
George Carter, an economics professor at USM, said he thinks the line of credit is a good resource because "counties have various things all the time they need to fund that are important."
Carter compared county finances to personal finances.
Carter said the county should use caution.
Campbell suggested that county supervisors publicly limit the use of the line of credit, earmarking any loans for specific purposes.