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Commissioners reject $9.2M loan proposal

The Washington County Commission’s failure to approve the $9.2 debt offering puts Washington County in a new fiscal year with a now-defunct 2013-14 budget, no plan to address immediate capital needs, and the prospect of spending the fund balance or raising taxes just to get through the next 12 months.
With large-ticket capital items removed from the operational expenses, a balanced budget for 2013-14 with a 2 percent salary increase for full-time employees and a $3,000 surplus was ready to present to county officials during hearings scheduled to begin last week.
However, with the possibility of those capital items returning to the departments’ operating budgets due to no action from the commission, those hearings were canceled.
Months of research, meetings and dissemination of paperwork to ensure commissioners had all of the needed information went into preparing for the final decision that was to be made during the June 24 meeting.
While the actual vote didn’t take place until that night, signs the proposed plan wasn’t going to pass were already there.
One of the largest capital projects, a new asphalt plant, couldn’t get a motion for support during the June 11 meeting of the Public Works Committee.
Highway Superintendent Johnny Deakins reviewed the turnkey proposal for construction of a new plant, including several asphalt production improvements, along with the purchase of four new trucks to replace the 1988 models the department currently uses.
“We’ve cut our workforce from 120 to 80, and going with larger trucks means fewer trips so we’ll be doing more with less,” he said, adding the proposed budget he submitted for the current year included a 1 percent reduction in expenses.
“If it weren’t for the bond, you (still) would have built the asphalt plant,” Commissioner Ben Bowman said.
“No,” Deakins answered, surprised. “The bond issue was always anticipated for the plant.”
Chair Gearld Sparks asked for a motion to recommend the project, but none was received. “All I can do is ask for a motion. There were five people here who could have made one,” he said when questioned after the meeting.
“I just didn’t feel like I could recommend it,” Commissioner Doyle Cloyd said, offering no reason.
Other commissioners who responded with silence were Mike Ford, Richard Matherly, Steve Light and Bowman. Ford was the only member of the Public Works Committee to vote in favor of the debt offering at the county commission meeting.
Mayor Dan Eldridge gave it another shot during the June 24 meeting, again repeating the reasons for the debt structure.
“I have had questions about borrowing, but it is not prudent to raid the fund balance now when we know there will be future capital needs,” he said. “We are now able to borrow at interest rates that are less than that of inflation.”
Eldridge said a low fund balance would jeapordize the county’s ability to borrow future funds, should they be needed, which also would come at higher interest rates.
Even the endorsement of the county auditor and the director of schools made no difference.
“We have looked at the debt offering, reviewed the terms, and believe it definitely needs to be something you take into consideration,” said Charles Steagall, of Blackburn, Childers and Steagall, the county’s auditing firm of more than 30 years.
Commission Chair Greg Matherly asked Director of School Ron Dykes what strategy would be the most helpful for the schools.
“We need additional revenue, whether it’s a reallocation or new pennies,” Dykes said. “We have to keep the school buildings standing, and we’re talking about massive cuts in all programs (if more revenue is not received.)”
The debt offering would have provided $950,000 in reimbursement funds for the school system in the 2012-13 fiscal year, and $2.8 million in a lump sum to address immediate capital needs, such as new roofs for two buildings, during the current year.
Additional capital projects now in question include the replacement and repair of two county bridges, the purchase of solid waste compactors and containers, the replacement of a First Responder vehicle for the Fall Branch Volunteer Fire Department, and an operating system that would enable Washington County to comply with regulations of the Affordable Care Act.
“These aren’t projects that if they don’t get done, it’s ‘oh, well,’” Matherly said. “I’m here 10 to 12 hours every day, and if I felt there was something on the list that was just a want, I would have suggested taking it out.”
Matherly also can’t support spending the fund balance. “We can’t take $9 million out of the fund balance and have $5 million left to run the county,” he said. “Director Dykes said we’ll be needing a new school in a few years, and I don’t want the bond rating to be down (due to a low fund balance) when we go in to borrow.”
Increasing from the county’s main source of revenue also has no appeal. “If we raise (property) taxes, we’re looking at 20 cents, and I’m not going to do that either,” he said. “I know the alternatives, so I laid out my options and I voted for the most rational plan. That’s what everyone should have done.”
Matherly doesn’t understand the lack of input from commissioners regarding their opposition to the proposed list of capital items. “I don’t know what the hold-up is,” he said. “Nobody identified any fat or objected to the call for the question in the vote,” he said.
The debt offering failed on a motion made by Commissioner David Shanks and seconded by Cloyd to send the bond proposal back to the Budget Committee for further consideration and study. The list of capital items is to be returned to the full commission with a budget for 2014-15, which is the year payments on the debt service would begin.
Commissioners voting with Shanks and Cloyd were Sam Humphreys, Joe Sheffield, Alpha Bridger, Sam Phillips, Phyllis Corso, Richard Matherly, Mark Ferguson, Roger Nave, Sparks, Bowman and Light.
A called meeting of the Budget Committee is set for Wednesday, July 3, at 9 a.m.