Debt service issue again stymies budget decision
Debt service funding once again proved to be the sticking point for the Carter County Budget Committee Tuesday as the group recessed its meeting for one week after several motions regarding the debt service fund and a school project failed.
Last week, members adjourned a committee meeting after several motions to add funding to the debt service budget failed after not gaining a second.
During Tuesday’s meeting, County Finance Director Ingrid Deloach again told the committee the Debt Service fund has a severe funding shortage.
According to Deloach the county has $2.3 million in expenditures from the fund, while the current tax rate only creates revenue to the fund in the amount of $1.3 million. She said this has created a shortfall of $955,924 within the Debt Service fund. In order to balance the budget for Debt Service for the 2014-2015 fiscal year, Deloach said a tax increase of 12 cents would be needed.
“This does not include any new notes or projects,” Deloach said. “It just covers what we have.”
Committee member Charlie Bayless asked if the shortage could be absorbed with the fund balance.
“If you absorb this like you have in years past, you will be in absolute desperation for the 2014-2015 budget,” Deloach said. “Is it possible? Yes it is. Is it smart? It absolutely is not.”
Committee member Bill Armstrong made a motion to add 12 cents to the tax rate for the Debt Service fund.
“That $955,000 is not going to go away,” Armstrong said. “We need to bite the bullet and get rid of it.”
The motion by Armstrong failed due to a lack of a second.
After the failed motion by Armstrong, committee member Lawrence Hodge made a motion to add 8 cents to the tax rate for debt service and 15 cents to the tax rate for the construction of a new middle school in Stoney Creek as requested by the school system, creating a total tax rate increase of 23 cents. The motion was seconded by committee member Steve Chambers.
When the motion was put to a vote, Hodge and Chambers cast the only votes in favor of the motion. Committee members Bayless, Armstrong, Tom Bowers, Nancy Brown and Sonja Culler voted in opposition to the motion, while committee chairman Harry Sisk abstained on the vote.
Members of the committee then talked about appropriating some funding to the school system to allow the school project to continue without the commitment of the $15 million the school is requesting for the project. Director of Schools Kevin Ward reported to the committee that the school system would need approximately $550,000 in order to proceed with the project to get designs completed along with other preliminary work.
“We are talking about spending $550,000 on something that we don’t know will ever happen,” Chambers said. “That is not spending the tax payers money wisely.”
Hodge then stated he wanted to make a motion to send the debt service budget to the full commission for consideration. “I make a motion we send 20 cents to debt service before the County Commission and let them decide,” he said.
Deloach informed the committee that motion was not possible. “You have to approve a budget and send to the Commission,” she said. “It is not up to them to decide, it is up to the budget committee.”
Hodge then made a motion to add 14 cents for the school construction project and 6 cents for debt service, for a total tax rate increase of 20 cents. The motion was seconded by Chambers.
On a vote, the motion failed with Chambers and Hodge casting the only votes in favor of the motion.
Brown said she supports the schools and understands the need for a new school in the Stoney Creek community, but she feels that the project needs to cut costs where it can. She cited that preliminary plans call for a 1,400-seat gymnasium at the facility, but that only 150 parking spaces have been built into the design.
“I am for the schools, I really am, but just like we had to do several years ago we need to cut corners,” she said.
Culler said she felt the debt service issue needed to be addressed. “We are in bad shape and it is only going to get worse,” she said.
Sisk also cautioned members of the committee that debt service funding needed to be addressed. “Folks, we need to remember how we got in this situation, and that was through making every effort not to raise the tax rate,” he said. “We drew from our reserves and they have dwindled down and now we are struggling to pay it back.”
Armstrong made a motion to add 10 cents to the tax rate for the debt service fund. He said that would be strictly for debt service and would not include the school project. The motion was seconded by Bowers.
The motion failed on a tie vote with Armstrong, Bowers, Sisk and Culler voting in favor of the motion and Chambers, Hodge, Bayless and Brown casting dissenting votes.
Following that failed vote, Chambers made a motion to recess the meeting, saying that he did not feel any progress was being made. Chambers said he would like additional time to review the Debt Service issue and also to speak with the school system regarding its requests for funding for a new middle school in the Stoney Creek Community.
After his motion, Chambers voiced displeasure regarding a recent article in the Elizabethton Star which quoted Deloach as saying that failure by the Commission to pass a budget by the July deadline set forth by the state could constitute a violation of law.
“This commission has never failed to pass a budget on time,” Chambers said.
Bowers spoke up and said that the county has missed the July deadline for passing a budget on previous occasions.
“We have passed a continuing budget before,” Bowers said. “I don’t want to do it this year, but the state has always been fine with that.”
Prior to deadlocking on the debt service issue, the committee did approve an additional $155,331.81 in funding for the General Fund after some of the county departments reported to Deloach that they were unable to absorb the increased expenditures as directed by the budget committee.
The budget committee meeting was recessed until 5:15 p.m. on Tuesday, July 1.
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