After amending the proposed budget and on a divided 13-9 vote, the Carter County Commission set a tax rate of $2.45 for the 2014-2015 fiscal year Monday evening.
That proposed budget had included more money for the county’s debt service and an increase in the general purpose school fund to meet state-required maintenance-of-effort funding, and proposed a $2.47 tax rate.
But that rate, proposed by the Budget Committee, failed by a wide margin of 15-6.
Commissioners Nancy Brown, Harry Sisk, Tom Bowers, Sonja Culler, Bill Armstrong and Pat Hicks voted to approve the tax rate as proposed by the budget committee, but Commissioners Lawrence Hodge, Buford Peters, Willie Campbell, Joel Street, Richard Winters, Ronnie Trivette, Charles Von Cannon, Steve Lowrance, L. C. Tester, Charlie Bayless, JoAnn Blankenship, Bobbie Gouge-Dietz, Steve Chambers, John Lewis and Scott Sams voted against it.
Commissioners Ken Arney and Robert Gobble were absent, and Commissioner Russell Kyte had stepped out of the room prior to the vote.
After the failed attempt to set the tax rate, Peters addressed the commission about the proposed new middle school in the Stoney Creek community.
“In order to proceed with the school we are going to have to have money for plans,” he said.
Peters then asked Carter County Finance Director Ingrid Deloach how much money was being returned to the General Fund from the 2013-2014 budget; she said the amount was approximately $800,000.
He then made a motion to remove the proposed 12-cent increase to the debt service from the proposed budget, take the $800,000 being returned to the General Fund and apply it to the debt service. Peters’ motion also included the addition of 10 cents to the tax rate for the school system to allow the system to proceed with plans for the new school. That would be in addition to the 2 cents added to the tax rate to meet the county’s maintenance-of-effort requirements -adding a total of 12 cents to the tax rate.
His motion didn’t make it to a vote.
Sisk, chair of the Budget Committee, said Peters’ proposal was not in accordance with state law.
“It has been determined you cannot just take funds from the fund balance and put it in the debt service. It is not permissible,” Sisk said, adding that Deloach had contacted the County Technical Assistance Service to get an opinion on the issue.
Deloach confirmed she had spoken with CTAS as well as the State Comptroller’s Office on the issue of using the rollover money to fund the debt service
“You cannot take from any fund balance that gets a tax appropriation and give it to another fund that gets a tax appropriation,” Deloach said. “That is illegal and that was confirmed through the state comptroller’s office.”
Deloach also cautioned the Commission about appropriating an additional 10 cents from the property tax rate to the school system.
“If you give them 10 cents for one year, you will have to give that to them from here on out,” she said, explaining that under state law, the county has to maintain its level of per-pupil funding through maintenance-of-effort funding.
Peters said it was his understanding that next year the school system could put the 10 cents toward the construction of the new school, but Deloach said that was not the case. The finance director said the 10 cents would go toward the general purpose school fund, but that any capital projects must be funded through debt service because the county must take out debt bonds for the projects.
She said once the 10 cents was added to the general purpose school fund, it would remain there due to the state’s maintenance-of-effort funding requirements.
Deloach also addressed a motion allocating additional funds to the school that passed at the last budget committee meeting prior to the public hearing on the budget. In that motion, the committee approved giving the rollover money being returned to the General Fund from the 2013-2014 budget to the school system to pay for architect fees for the proposed middle school.
“You can’t pay for architect fees out of fund balance,” Deloach said, adding that she had spoken with the state comptroller’s office, the state Board of Education and CTAS regarding the issue, and had been told using the fund balance for the architect fees would be illegal.
Peters withdrew his motion and the Commission entered a 10-minute recess.
When Commissioners returned, Peters took another and eventually successful shot at setting a rate.
His new motion took 10 cents away from the General Fund tax rate and added it to the debt service tax rate. He also added another 10 cents to the debt service tax rate to be earmarked to for a one-time capital outlay note to fund the architects’ fees for the proposed new middle school. Peters’ motion would also add 2 cents to the general purpose school fund to meet maintenance-of-effort requirements from the state.
The motion would set the tax rate at $2.45 per $100 of assessed property value. The breakdown would see 91 1/2 cents going to general fund, 34 1/2 cents to debt service, 13 cents to the highway department and $1.06 of the tax rate to the general purpose school fund.
Deloach cautioned the commission about taking funding away from the general fund to put into the debt service.
“That is exactly how we got into this mess to start with, only in reverse,” she said, reminding the group the county had previously taken funding away from debt service to put the money into the general fund.
Despite Deloach’s objections, the motion passed on a split vote of 13-9. Hodge, Peters, Campbell, Street, Winters, Sisk, Bowers, Lowrance, Blankenship, Chambers, Culler, Armstrong and Hicks voted in favor of Peters’ motion. Those casting dissenting votes were Brown, Trivett, Von Cannon, Tester, Bayless, Gouge-Dietz, Lewis, Kyte and Sams.
With the passage of the motion, the property tax rate was set at $2.45 for the 2014-2015 fiscal year. After the passage of the tax rate, the Commission approved the appropriations for various funds through the budget without any discussion on a 20-2 vote. Only Brown and Trivett cast dissenting votes.