Comptroller expresses ‘concern’ over budget

Published 9:37 am Wednesday, October 15, 2014

A county budget passed in July in the midst of controversy and questions regarding the legality of actions taken has once again attracted attention – this time from the Tennessee Comptroller’s Office.
In a letter addressed to County Mayor Leon Humphrey and dated Oct. 3, Comptroller of the Treasury Justin Wilson said both the 2014-2015 fiscal year budget and the previous year’s budget have raised concern with his office.
“Based on our review of the Carter County Commission’s adoption of the county’s budget over the last two years, we have reason for concern,” Wilson said in the letter.
In a reference to alterations made to the county’s budget following a public hearing, Wilson says language in state law, as well as an opinion from the Tennessee Attorney General, sets the requirements for “alterations or revisions by a county legislative body to its proposed budget and its debt service requirements.”
At the time of the public hearing on the budget, members of the budget committee voted to allocate an additional 12 cents on the tax rate to the debt service fund in order to balance a pre-existing deficit in that fund but did not include any allocations for a proposed new middle school project in the Stoney Creek Community.
At the July commission meeting, Commissioner Buford Peters made a motion to strike the proposed 12 cents for debt service and move 10 cents from the General Fund tax rate over to the debt service tax rate. He also wanted another 10 cents, added to the debt service tax rate, to be earmarked for a one-time capital outlay note to fund the architects’ fees for the proposed new middle school.
Additionally, Peters’ motion asked that 2 cents more be added to the general purpose school fund to meet maintenance-of-effort requirements from the state.
His motion, when adopted, set the tax rate at $2.45 per $100 of assessed property value. The breakdown sent 91 1/2 cents to the general fund, 34 1/2 cents to debt service, 13 cents to the highway department and allowed for $1.06 of the tax rate to be allocated to the general purpose school fund.
During debate on Peters’ proposal, Commissioner Nancy Brown questioned the legality of altering the recommendation from the budget committee for funding of the debt service.
Brown’s concerns went unanswered and despite objections by County Finance Director Ingrid Deloach, who said removing funding from the General Fund would create a shortfall in that budget before the year was over, Peters’ proposal passed on a split vote of 13-9.
“That is exactly how we got into this mess to start with, only in reverse,” Deloach said during the July meeting, reminding the group the county had previously taken funding away from debt service to put the money into the general fund.
“What we are doing is illegal after the public hearing,” Brown said, referring to a recent opinion by the Tennessee Attorney General that said counties could not decrease the proposed debt service funding recommended by the budget committee after the budget had been presented for a public hearing.
That opinion, number 14-09, was issued in response to a question: “Does a county commission operating under the County Financial Management System of 1981, codified (in state law) violate (state law) if the county commission votes to reduce debt service portion of the budget proposed by its budget committee after the budget committee holds a public hearing on its budget proposal and submits that proposal to the county commission?”
The opinion issued by the State Attorney General on the question contains only one word in reply: “Yes.”
In the analysis portion of the opinion, Tennessee Attorney General Robert E. Cooper Jr. explains the law surrounding the County Financial Management System of 1981 as well as state law regarding budgets.
“The CFMS requires the budget committee to: fully provide in the budget for all requirements for debt service, interest and bond maturities and for any cash deficit in any fund at the beginning of the fiscal year, and … propose a tentative tax rate to fund such budget,” Cooper’s opinion said.
After the budget was passed by the commission, it was subsequently vetoed by Humphrey, who cited the questions on legality as the one of the reasons behind his veto. The mayor’s veto was overridden at a special called meeting of the Commission and the budget was set.
Now it appears that both Wilson and Cooper agree with Brown’s and Humphrey’s opinion on the legality issue facing the county’s budget process
“The County Commission has not followed those best practices in their adoption of the two most recent budgets,” Wilson said. “Therefore, going forward, we strongly recommend that the County Commission comply with the budget adoption guidelines applicable to the counties operating under the County Financial Management System of 1981.”
The Elizabethton Star obtained a copy of Wilson’s letter Tuesday from the Comptroller’s Office. John Dunn, public information officer for the Comptroller’s Office, said a review of the county’s budget was not in response to a complaint.
“We did not receive a complaint related to the handling of the Carter County budget,” Dunn said. “Our review was conducted through the normal course of business. The letter we sent to the County Mayor resulted from that review.” Copies of the letter were sent to all 24 members of the County Commission, even though 14 of those members were not on the commission at the time the budget was passed.

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