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Budget cuts could have dire consequences for county

Budget cuts approved during the Sept. 8 called meeting of the county commission will have a far-reaching impact — possibly killing the deal for the sale of the Downtown Centre and ending Northeast State’s plans to lease the site for a Washington County campus.
Other approved reductions put the county at risk for breach of contract on a liability insurance policy and jeopardize economic development efforts that would bring new jobs for the residents of Washington County.
“This is a situation of politics gone bad,” Mayor Dan Eldridge said.
“It is obvious these cuts were to impact the budgets and departments I control. There is no question a lot of these limitations were to diminish the job I was elected to do.”
After reviewing the proposed budget submitted by the Budget Committee for almost a month, commissioners ended up approving an amended version presented by Commissioner Mark Ferguson with a list of budget cuts they had never seen before that night.
Repercussions of just a sample of the cuts proposed by Ferguson and approved by a majority of the commissioners are:
• The reduction in the health insurance benefits for the mayor’s office, which includes Eldridge and his assistant, disqualifies the county from participating in the pre-tax contribution election so the employees’ share of premium costs will now be taxable.
• The reduction in the Other Capital Outlay line item does not leave enough funds for the needed replacement of the water heater in the jail.
• The cut to the Other General Administration line item cut the salary of the mayor’s assistant and completely eliminated the Communications Director position held by Jeff Keeling.
Commissioner Ethan Flynn made a motion to remove Keeling’s job, the only staff position included on the list of cuts, from consideration. Grandy seconded the motion.
During discussion, Tomita said the commission’s removing a staff position would set a bad precedent.
“If this passes, every county employee from this day on better watch their back,” Tomita said, referring to the danger of making the wrong 13 people mad.
The motion to remove Keeling’s position from the list of cuts was defeated.
Eldridge said the knowledge that staff positions are subject to elimination by the county commission with no justification will have an impact on employee recruitment and retention.
The same is true for new businesses considering a move to Washington County, he said. “When they learn of the vindictive attitude of this commission, why would they bring their investment here?” Eldridge asked.
The reduction in maintenance agreements and building insurance proposed by Ferguson, who was recently elected chair of the County-Owned Property Committee, will affect the funds used to pay for elevator inspections and repairs, computing support, fire alarms and coverage for the building contents and liability.
Commissioners also approved the elimination of the line item for the $6,500 study of the county’s post-retirement benefits plan.
“The work is being completed on this project as we speak,” Eldridge said. “This study is part of the county’s audit requirements.”
Another audit issue is the reduction of funds for the liability insurance policy the county has already paid.
One of the biggest impacts will be felt by the cut to the Contributions to Other Agencies line, which reduced the amount that goes to the Tax Increment Financing program overseen by the Johnson City Development Authority.
Failing to uphold this obligation could be the end of the pending sale of the Downtown Centre that is slated to net the county $1 million and bring a Northeast State Community College teaching site to Johnson City.
“The JCDA was going to use that $100,000 for debt service to buy the Downtown Centre,” Eldridge said.
“I’m surprised and concerned they (the commissioners) failed to consider the impact on the line items that were cut or eliminated,” Eldridge said.
“It’s obvious their intentions had nothing to do with being good stewards of the taxpayers money.”
Not that there wasn’t some opposition to the amendment presented by Ferguson who made the motion during the August commission meeting to postpone the vote.
“We just got this,” Commissioner Pete Speropulos said, referring to the list from Ferguson that included for each cut only the department name, line item number and category, and the proposed dollar figure to be reduced.
Commissioner Joe Grandy, a member of the Budget Committee, asked what portions of the line items Ferguson was proposing to cut.
“What was in there before is what was expected to be needed for this year,” Grandy said.
Commissioner David Tomita agreed. “We’re facing the same thing we had the last time we sat down with the budget and were told we had only had it for 15 minutes (after the public hearing ended),” he said, referring to Ferguson’s comment during the August meeting.
Tomita made a motion, seconded by Grandy, to divide the line items for discussion and vote on each separately.
The motion was defeated, which required commissioners to vote on all of the reductions as a group.
Mayor Dan Eldridge addressed several of the cuts involving funds that had already been committed, and contractual agreements that are required by law to be maintained.
“I think you need to know what you’re voting on,” he said.
Despite his efforts, commissioners passed the budget at the end of a four-hour session.
The nine commissioners to vote against the amended budget were Skip Oldham, Mitch Meredith, Tomita, Ken Lyon, Grandy, David Shanks, Speropulos, Sam Humphreys, and Flynn.
Doyle Cloyd was absent from the meeting, and Evert Jarrett left before the final vote.
Eldridge said his office continues to pour over the amended budget to determine the damage.
“One thing that is a real problem is the county has been operating on a continuing budget for the last two and a half months,” he said.
“We’ve already spent 20 percent of some of the line items. I can’t unspend those dollars.”
Another thing Eldridge says the public needs to understand is one way or the other, “we have to fix this.”
Eldridge said the Johnson City Commission is voting this week on Northeast State’s redevelopment plan to allow the community college to move forward with the plan to open a site in Washington County.
“They understand TIF funding, and even if we fix our budget, the deal is still dead if Johnson City doesn’t approve,” Eldridge said.
“I don’t feel they will have any sense of urgency given the position the county has taken. We can’t let this Northeast State deal not happen.”
Eldridge is working with the county’s auditors and the state comptroller’s office to confirm the cuts are allowable under the law, and how to determine the best plan to recover. At this point, he has three options.
“I have the authorization to move money within departments, so we may be able to fix some of this,” he said.
“The big concern we have at this point is there was so much cut, there aren’t enough funds left to move.”
The second option is through action by the Budget Committee, which is scheduled to meet Wednesday, Sept. 14, at 2 p.m.
“Once we identify all of the areas impacted, the Budget Committee can recommend to the bull commission amendments to the budget that was approved,” Eldridge said.
The third, and least desirable according to Eldridge, is the mayor’s veto of the budget, which he has 10 days to cast.
The right to veto wouldn’t even be an option had Eldridge not declared before the Sept. 8 meeting he would not seek reappointment as chair of the commission.
“It’s one of the reasons I did it,” he said. “I wanted to preserve that option.”
The budget would then return to the commissioners, who would have 20 days to overturn the veto, giving them the final word.
“All it would need is a simple majority, and I have no reason to believe it wouldn’t pass,” Eldridge said.
No change was made to the agreement with Washington County Schools in the amended budget, though at least one commissioner was not in favor.
“I’m not prepared to obligate surplus funds down the road to the schools because we don’t know the future,” Shanks said.
“What we’re headed for is a tax increase. I understand the state says the county can pay more, but my constituents can’t pay more.”
The school system agreed to use its fund balance to cover the deficit for the current year if the county will step in to fill the gap in future years.