Did county break law setting budget? AG says ‘Yes’
Published 8:45 am Friday, January 9, 2015
A budget battle that divided the Carter County Commission in 2014 is once again making waves as the State Attorney General issued an opinion Wednesday saying the commission violated state law in setting this year’s budget.
In his second rendered opinion of 2015, Attorney General Herbert H. Slatery III concluded the commission did violate state law when it altered debt service funding for the 2014-15 budget.
He also outlined the penalties the commissioners could face, who has the authority to enforce those penalties and the necessary requirements to file suit against the county regarding the violations.
In the wake of the budget controversy, County Mayor Leon Humphrey requested an opinion from the attorney general. He provided the following description with his request: “Following a public hearing on the budget proposal, the budget committee submitted the proposal to the county commission. The county commission voted to reduce the proposed debt service allocations, but to increase the deb service tax rate to satisfy debt service requirements.” Humphrey’s request also cited state law, which says “the county legislative body may alter or revise the proposed budget except as to provision for debt service requirements and for other expenditures required by law.”
At the time of the public hearing on the budget in July, 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. However, they 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.
During debate on Peters’ proposal, both Humphrey and Commissioner Nancy Brown questioned the legality of altering the recommendation from the budget committee for funding of the debt service. They cited an opinion issued in 2014 by former Tennessee Attorney General Robert E. Cooper Jr. Cooper who opined altering the debt service funding after a public hearing violated state law.
County Finance Director Ingrid Deloach warned the commission that diverting funding from the General Fund to the Debt Service would create a shortfall in that budget before the year was over.
But, former Commission Chairman Tom “Yogi” Bowers said the state law in question had not been challenged in court and referred to the letter from the state Attorney General as “just an opinion.”
Keith Bowers, who was the County Attorney during the budget process, also warned members of the Commission against altering the debt service, telling them not to be “a test case.”
Despite questions of legality and warnings from the county’s finance director and attorney, Peters’ proposal passed on a split vote of 13-9.
Humphrey’s request for an opinion posed the following questions:
• Did the county commission violate state law?
• If the county commission violated state law, who has the authority and obligation to enforce compliance with this statute?
• If a county commission violated state law, who would have standing to sue? In what court would the case be filed? Under what statute?
In response to the question as to whether or not the county commission violated state law with their actions, Slatery rendered a one-word opinion: “Yes.”
A county official who violates state law outlining budget requirements and procedures is subject to penalties, Slatery said, which could include ouster from office.
“A suit to enforce the penalties would be a quo warranto action that ordinarily is initiated by the district attorney general,” he said. “The county also has the authority to enforce future compliance with (state law) by instigating a declaratory judgment action that seeks injunctive relief.”
Though a quo warranto action is typically started by the district attorney general in limited circumstances, a private citizen my file a quo warrant action to seek relief, he said.
“The suit, though, still must be brought in the name of the district attorney general,” Slatery said. “The plaintiff is required to serve a copy of the complaint upon the district attorney general, who must then decide whether to join in the petition.”
“If the district attorney general does not consent to the lawsuit,” he added. “The trial court then has the duty to conduct an in limine hearing to determine whether the plaintiff should be permitted to proceed without the district attorney general’s participation.”
If it is determined the district attorney general “unjustifiably refused” to bring suit, Slatery said the trial court shall permit the action to proceed in the name of the State of Tennessee.
In December, a local community action organization filed a formal request with District Attorney Tony Clark asking for an official investigation into the actions taken by the Commission in altering the debt service funding after a public hearing had been held.
During meetings where the budget allocations were discussed, some members of the commission said state law was not violated because the approved budget actually contained more funding for debt service than the budget presented at the public hearing did.
But, Slatery said, despite the fact funding was increased, it is still his opinion state law was violated based on the code prohibiting alteration or revision of the debt service portion of the budget after the public hearing. Slatery also lists the definitions of “alter” and “revise” and said that “unambiguous statutes must be construed to mean what they say.”
A lawsuit could be brought against the county by any bond holder or creditor who is affected by the alteration to the debt service funding and, in some circumstances, by citizens and taxpayers.
“While suit cannot be brought merely for the vindication of a public wrong, persons who suffer harm that is not common to every citizen have standing to sue,” Slatery said, adding taxpayers can challenge illegal use of public funds.
“Consequently,” Slatery said, “county taxpayers could have standing to sue for a violation of (state finance law) if the county commission’s vote to reduce the budget committee’s debt service allocations has resulted in the diversion of funds and the imposition of an additional tax burden.”