Laura Incalcaterra

lincalca@lohud.com

Rockland County has a state-certified deficit of $125.6 million.

Rockland's actual deficit estimated to hover around $145 million, once 2013 books are closed.

Investors willing to pay premiums for Rockland's notes, which sell for $11 million more than sought.

County will repay $107 million in notes over 10-year period starting in 2015.

The issue:

Rockland County's deficit requires it to continually borrow money to keep operations afloat, leaving it unable to substantially close the budget gap or invest in county programs, including needed infrastructure improvements.

Proposed solution: Financial consultants recommended in December 2011 that the county borrow the equivalent of its deficit to allow it to get ahead of the problem. The money would allow the county to quickly pay down a significant part of the deficit and eliminate the need for frequent short-term borrowing.

The growing deficit: In 2006 the deficit stood at $2.9 million; 2007: $33.55 million; 2008: $31.5 million; 2009: $38.7 million; 2010: $52 million; 2011: $80 million; 2012: $125.6 million; 2013: estimated at nearly $145 million.

How it happened: A 2010 state comptroller's report concluded various factors contributed to the deficit, including loans from the county's general fund to other funds, namely Summit Park Hospital and Nursing Care Center; a $20 million tax certiorari with Mirant Corp.; and the repeated overestimation of sales and mortgage taxes and other revenues.

Clearing hurdles: In November 2013, after a long effort, the state Legislature and Gov. Andrew Cuomo finally approved the county's request for the home-rule authority it needed to move forward with a deficit-reduction loan. The legislation allows up to $96 million to be borrowed. In January, the state Comptroller's Office certified the county's deficit at $125.6 million as of Dec. 31, 2012 — the final hurdle to borrowing the money.

Re-priced to sell: On Wednesday, the county went out to borrow $96 million. Its notes generated strong interest among investors and led to a "re-pricing" — where investors are willing to pay more than the asking price — that netted the county $107 million, or $11 million above what it sought. Rockland finance director Stephen DeGroat said the county again had success in securing a low interest rate, this time for 2.7 percent.

Spending the money: The $107 million will permanently address the equivalent portion of the deficit because of the way it is recorded — as a loan and not a deficit. That allows the county to put the cash back onto its books, knocking the certified deficit down to less than $20 million, DeGroat said.

Why it matters: Just as significantly, the $107 million in cash will be tapped to pay off a $45 million revenue anticipation note due Friday and a $60 million revenue-anticipation note due in June. Paying off the loans means no additional revenue anticipation notes will be needed for cash flow this year or in 2015, putting an end to the frequent short-term borrowing that has crippled the county's ability to take true charge of its finances.

Payback: The loan will have to be repaid each year for the next 10 years starting in 2015. An interest payment of $6 million will be due in 2015 and then a payment of $13 million for each of the following nine years, DeGroat said.

What about taxpayers: A number of significant questions remain: Will taxpayers see significant property-tax increases to pay back the loan? Will the shutdown of the county's in-patient mental health care unit and the sale of Summit Park Hospital and Nursing Care Center help reduce the impact? Rockland County Executive Ed Day did not respond to a request for comment.

Twitter: @LauraLoHud