Daily Mountain Eagle
When it comes to what would be paid for with the $7 million raised from the 1-cent sales tax on the Aug. 15 ballot, the first priority in the legislative act creating the tax involves paying the county’s debt — which may …
Daily Mountain Eagle
When it comes to what would be paid for with the $7 million raised from the 1-cent sales tax on the Aug. 15 ballot, the first priority in the legislative act creating the tax involves paying the county’s debt — which may save the county from a large series of layoffs, budget cuts and reduced services.
The $1.5 million a year planned to come from that money is crucial on avoiding bankruptcy, as the county is currently looking at deficit funding for Fiscal 2018 without the tax.
Voters will go from 7 a.m. to 7 p.m. Tuesday in the county to vote on the tax, as well as in the U.S. Senate primaries.
Commission Chairman Jerry Bishop said in a commission meeting on Monday that commissioners have talked to accountants, bankruptcy lawyers and officials from bankrupt counties.
“Walker County cannot survive after February ‘18 if we don’t get a little revenue,” he said. “People told us to create revenue.”
The enabling act for the tax, Act 2017-256, also called HB474, notes, “The net proceeds from the collection of tax shall be used as follows: (1) The amount needed each year in order to make payments to payoff the general obligation warrants outstanding and Public Buildings, Bridge and Road Tax debts (PBBR) outstanding for up to the next 15 years or until final repayment.” Other allocations then follow.
Out of the $7 million in annual revenue, $1.5 million will be going in 2018 for the first principal payments on the 2002 bond issue, starting in February. It amounts to “payment on $9 million that we borrowed in 2002 that we don’t pay off” until 2033, Bishop said. The county will pay roughly $1.5 million for 15 years, and then $514,468.75 in February 2033.
Jasper insurance agent Roger Wilson, who is in charge of the private campaign for the tax, recently noted the 2002 issue was deferred in payment for 10 years, and in 2012 the commission refinanced it. Handouts from the commission indicate refinancing the 2002 issue saved $3.8 million from the county’s debt service.
During budget discussions in February, County Administrator Cheryl Ganey said a 2013 general obligation series will be paid off by 2032, costing $15.5 million.
A second issue from 2013, the PBBR issue, will cost more than $10 million through 2033. The total principal for the two bond debts through 2033 will cost $17,880,000. With another $7.6 million in interest, the overall total county debt cost through 2033 will be $25,557,191.
About $600,000 in interest has been due each year since 2014, with half owed earlier on Feb. 1 and the other half owed in August. The first principal payments on any of the debt are due in February 2018, at $920,000 that month, according to a detailed bond payout schedule released from the county. (Some handouts from the county show $934,000 on a bar chart, which does not include the interest). The overall February payment will jump from $300,000 to $1.2 million.
However, with the principal of the bond issue due next February, commissioners were also told in February that it would lead to a major deficit for the county.
The Fiscal 2018 General Fund Budget, which would go into effect for Oct. 1, would provide $10,386,000 in revenue, including $734,000 from the $10 car and boat registration fee that was put in place to pay off the construction of the Walker County Jail. The jail was paid off last year, but the law did not give an ending date for the tag fee, which is rolling forward. (The act for the sales tax would remove the tag fee altogether if voters approve the sales tax; otherwise, it would remain in place.)
Even with nearly $10.4 million in revenue, expenses currently would amount to $11,783,000, leaving a deficit of $1,397,000 for Fiscal 2018 without the tax.
County officials are vocal that the county would likely face bankruptcy without the proposed tax. The county’s current 2 cents of sales tax all goes to education, leaving the county at the mercy of low property taxes and dwindling fees and grants from the state and federal government.
Davis told local mayors recently, “But I am telling you as clearly as I can tell y’all, from the bottom of my heart, the truth: If we don’t get this revenue on Aug. 15, it is a doom-and-gloom scenario,” adding mass layoffs would occur and paved roads would be turned into dirt roads.
“I can give you the numbers,” he said. “We’re looking at a 25 to 30 percent cut across the board probably to keep the county from bankruptcy, and I don’t think anyone here wants the county to go bankrupt. But I can tell you if it doesn’t pass on Aug. 15, bankruptcy is on the table.”
He went on to say that when he and Aderholt were elected in 2012, “this county was ready for bankruptcy within six months. So we have saved the county $7 million in six years by streamlining and cutting services, fixing our solid waste department that was losing a half million dollars a year and restructuring this debt that saved almost $4 million. All the steps have been done to get us to this point here.”
County administrator Cheryl Ganey presented a basic plan earlier this year to the commission that would deal with a $1.4 million deficit.
That included an immediate hiring freeze for all departments in the General Fund, except for public safety (meaning the Sheriff’s Department). By this past June 1, department heads were to have presented spending plans, and by July 1, General Fund departments, except for public safety, would see a 15 percent decrease in the budget. Also, July 1 was to have mandated no overtime for all departments in the General Fund, except where required by law.
Then, in the Fiscal 2018 budget, Ganey anticipated a 20 to 25 percent budget cut for the General Fund except for public safety.
However, the commission did not do any of that, as it decided to attempt another plan first, asking the Legislature and then voters for an enabling act to create the 1-cent sales tax.
The act would also remove the hated $10 car and boat fee and distribute funds for fire and rescue departments, public security, economic development and city and county roads.
Bishop said at a commission meeting Monday the county has to go forward, not backward, noting that government bankruptcy is not the same as personal bankruptcy.
“You still pay these bills,” he said, saying others in court will then tell the county how it will make payments. “Jefferson County is still paying on their bonds. I asked them.”
District 3 Commissioner Ralph Williams said the vote was going to be one of the most important votes the county has faced. “It’s going to be a turning point for us,” he said.
“It’s not going to get better,” District 4 Commissioner Steven Aderholt said, noting he and Davis started working on the problem after first being elected to the commission in 2012. “There’s not a magic fix other than we are not going to have in this county what we don’t pay for.”
He said the county pays the lowest property tax of any county in the nation, “except for one maybe in Alaska and one in Hawaii. They don’t have county roads. They have snow and volcanoes.
“You hear people in the background making snide remarks about politicians,” with allegations that money is wasted, Davis said. “I realize bad decisions have been made in the past. But I serve with some really good guys up here, honorable men, and everybody is doing the best we can do to give the citizens of this county every benefit you can get out of every single tax dollar.”
Aderholt said, “This vote next week is going to be a pivotal time for us. We have chosen not to pay for things. We don’t do it through property tax and we don’t do it through a sales tax in the General Fund. All our sales tax that we do get goes into the Schools Fund.”
He said he and Davis had looked at the numbers for years, joined recently by the new commissioners, and noted his conclusion.
“We are at an impasse. Something has got to change. I hope we can make the decision to fund ourselves like other successful counties do. They invest in themselves. They invest in their infrastructure. They invest in their industrial recruiting efforts. They invest in everything they have,” he said.
He said people ask him repeatedly why Walker County doesn’t look like Cullman County. Aderholt said the first reason is because they have had U.S. Interstate 65 for 50 years, and, second, their county sales tax rate is 4.5 percent, while Walker’s only 2 cents goes to the schools.
“Next week’s vote is really important for the future of this county,” he said.
Davis noted that health insurance also continues to rise for the county and other costs have been dealt with, but he noted no county workers have been laid off.
“That’s the financial situation we were left,” Davis said. “(County Administrator) Cheryl (Ganey) can attest to. Other folks can attest to it. And folks, the records are public. Anybody who wants to say mismanagement, or a bunch of crooks — my kids read that. They ought to be ashamed of themselves to put that when you got these five men who work as hard as they do everyday to make this county better. They ought to be ashamed of themselves to say that nonsense.
“None of us up here need this job. We do this job because we want to help this county, period. I’ve done it for five years and I’m going to continue to do it for the remainder of this term, everyday, to go to work to make this county better for each and every one of us, and your family and your kids. That’s what we’re going to do.”
Davis said the commissioners work hard for the taxpayers and voters of the county. “We take that serious, the decisions we make. We get up every day and try to do what is right,” he said, adding that letting people to vote on the tax issue was the right thing to do.
“We didn’t go and ask our legislators to pass it without the citizens voting on it,” he said.
He said the county is at a crossroads. “That is not some political theme,” Davis said, referring to advertising for passing the tax. “We’re either going to go right or left.”
Davis said if the tax is not passed, things will happen quickly. He noted discretionary funding would all be cut, along with the hiring freezes, layoffs and drastic cuts in services.
On Thursday afternoon, Ganey referred any questions about any current discretionary funding to Davis, who said examples include chambers of commerce, industrial board funding, mental health and libraries.
“All of that is happening quickly because we have a budget we have to pass by Oct. 1,” Davis said Monday. “We cannot budget a deficit. You got a $1.5 million payment coming due.” If cuts have not come into place, or the money is in place, “we are going to be default, so you are going to have a county government in default to a major bond issuance.”
He said all options are on the table, even if commissioners have to go to a zero-based budget and work up from there anew to make sure the debt is paid.
Bishop said the budget is cut to the bone and there is none left to cut.
“The part-time workers have helped this county stay in business the last four years,” he said.
Davis said the county has one worker dealing with accounts payable for the entire $22 million annual budget, dealing with thousand of checks and invoices without a staff. “There is not an elaborate staff to cut,” he said, noting he does not have a commission office and drives his own truck, without charging mileage.