Updated story: County scrambling to avoid late budget

Published 3:36 pm Sunday, May 14, 2023

Getting your Trinity Audio player ready...

The county could get a severe whacking of the wrist for the untimely submission of the new fiscal year budget. Claiborne County Mayor Joe Brooks along with the 21 members of the Claiborne Commission were warned last year not to be late in turning in an adopted budget to the Division of Local Government Finance.

Director Betsy Knotts addressed her concerns in a letter dated Aug. 18, 2022. In the letter, she pointed out that the Claiborne County Budget was adopted on July 18 and filed with her office on July 27.

“Please ensure next year’s budget is adopted prior to the beginning of the fiscal year. Please be aware that budgets that are not filed with our office within two months of the beginning of the fiscal year will not be approved by our office. Pursuant to state law, the county may not issue debt or financing obligations without an approved budget from our office. The annual budget must be adopted prior to the beginning of the budget year and submitted to our office within 15 days of its adoption for the county to be eligible to receive the annual budget certificate: tncot.cc/budgetcertificates,” reads the letter, in part.

Email newsletter signup

Mayor Brooks was asked in an interview to explain the issue of debt obligations and where it would put the county in paying its bills. He said the new budget should be submitted by late July or early August, which would be ahead of the approval deadline of Aug. 31 (two months after the start of the new fiscal year). He placed a best estimate of early July for the adoption of the new budget which means it would be in Knotts’ hands by July 15 – the cutoff date for receiving the certificate allowing the county to pay its debts.

“The problem with waiting until Aug. 31 is it holds our tax cards that will go out late, so our property tax dollars don’t start coming in until October or November. I’ll just say there will be every effort made to try to get (the budget) done in June,” said Brooks.

The new fiscal year budget could take the commissioners quite some time to review. Included in the hefty documents is the dual proposal to either raise the property tax rate from $2 per $100 of assessed value to $2.50 or go with the latter $2.30. If the second one is chosen, a tandem wheel tax of either $25 or $50 per vehicle, per year will need to be meted out, taking additional time. The commission will have to hold a public hearing before the second reading of the wheel tax resolution can be done.

At the time of the interview, Brooks was looking toward the May 15 commission meeting in which the new wheel tax would be debated.

Brooks says he is in favor of creating a $100 property wheel tax and keeping the existing tax rate of $2 per $100 of assessed value the same. Then, slowly raise the property tax rate at two or three cents each year as the wheel tax is allowed to go away.

“The wheel tax only needs to be in place for one year to generate a healthy fund balance for us. So, that could begin backing off as early as next year,” said Brooks.

He pointed out that those who rent homes may be against creating another wheel tax. However, if it is defeated, renters will likely be affected with lease increases as those who own commercial properties will be affected by the new tax rate as well.

The public needs to consider whether budgeting for a new $100 wheel tax, which works out to under ten dollars a month, would be a better proposition than facing a substantial increase of $25, $50 or more per month in rent, he said.

Another of Knotts’ concerns was that funds gleaned from last year’s American Rescue Plan Act (Fund 127 – COVID-ARP) be spent wisely and within regulations.

“The governing body budgeted the use (of) American Rescue Plan (ARP) funds. This budget approval is not an approval for a planned use of the ARP funds, and the county, with the assistance of its attorney, should determine that the planned use complies with federal regulations concerning the use of ARP funds. ARP funds spent contrary to federal regulations must be returned. ARP funds are non-recurring and should only be used for one-time expenses. When purchasing capital items, ongoing maintenance and operating expenses should be analyzed to show future demand on recurring revenues,” continues the letter.

Brooks said the county used the ARP funds within its parameters.

“We declared a million dollars as a revenue loss. As the statute reads, if you declare any money as a revenue loss, you can use it anywhere in your budget where you normally fund anything. The recurring costs she’s talking about is, if we wanted to set up a new line item or a whole new budget – if, for instance, we wanted to set up a homeless shelter, and we wanted to do that year one with the ARP money, we only get one expense with that. That’s a recurring expense that we have to add to the budget that we have to fund the following year,” said Brooks.

By declaring the ARP funds as a revenue loss, Brooks said the county was able to purchase vehicles, supply gas for patrol cars and make improvements to the jail.

Knotts states in her letter that county expenditures exceeded appropriations in the General Fund – Other Operations/Industrial Development and the School Federal Projects Fund in particular. She warned that the governing body needs to maintain close watch to ensure that the county stays within budgeting appropriations. Knotts made reference to the latest audit in which the school system’s federal projects fund showed a deficit of $45,664 in unassigned fund balance.

“The deficit occurred because the grant reimbursements were not requested in a timely manner….Overseeing cash inflows and outflows is essential to cash management,” reads the letter.

Knotts said the hallmark of a structurally sound budget is the inclusion of sufficient revenues that can be relied on every year to pay recurring expenditures required for normal governmental operations.