County facing similar budget woes as others have
Published 2:05 pm Friday, May 19, 2023
Claiborne County is not the first to face the real possibility that it could find itself being governed by the state if the new fiscal year budget is not adopted by deadline. In past years, the nearby counties of Hawkins and Grainger found themselves in similar circumstances.
Just like those two governments were warned, Claiborne County could be ordered as well to cut all discretionary spending before raising even one penny of the tax rate. That would include all charitable contributions that go to the various nonprofit organizations. The various volunteer fire departments, veterans’ service, rescue squad, the county agricultural extension agency, the senior centers and the library would not receive their usual annual contributions. Cuts would be sorely felt inside all non-mandated county departments. If this were to occur, nonessential services and personnel would likely be cut. Capital expenditures and capital outlay notes (loans) would not be approved.
All 21 Claiborne County Commissioners would feel the pinch as their salaries would be cut to coincide with current state minimums.
If the county decides to go with the $70 per year, per vehicle property wheel tax, it is expected to balance the budget. However, the all-important General Fund Balance will not be “replenished.” That means the county would have no reserves in that line item in case of immediate need until revenues start coming in and are approved for transfer into that fund balance.
Claiborne Commissioner Dennis Cook requested information recently from Eric Pearson, who is the county finance officer. Pearson’s replies were used to construct the following piece of the puzzle.
Last year, the budget was balanced using more than $1.035 million in COVID-19 funds. Operating Expenses got $555,800 of the money. This amount was used to balance the budget by reducing expenses otherwise funded by property taxes through the General Fund.
Capital Projects received $480,000 of the pandemic money that would have normally been funded by the General Fund – again, via property taxes.
The Budget Committee voted and unanimously approved a motion on June 28, 2022 to move the Operating Expenses and Capital Projects funds, along with money in the Solid Waste balance, to the COVID-19 (American Rescue Plan) fund.
If this maneuver had not been done, the current year’s property tax rate would have likely been about $2.26 per $100 of assessed value. Instead, the county property owners are experiencing a tax rate of just $2 courtesy of the five-year property reassessments in which the massive influx of homebuyers and builders were counted.
The county received a letter last August from Betsy Knotts, Director of the Division of Local Government Finance. In the letter, Knotts warns of the consequences of being late again this year in submitting the county budget to her 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.
The new budget year begins on July 1. The county commissioners must wrestle with many budgetary concerns, one of the most critical being the property tax issue.
(Writer’s note: Tennessee Comptroller Jason Mumpower, who was at the time the Chief of Staff for the Comptroller’s Office, weighed in on the Hawkins County budget woes in 2017. His comments were filed in a story penned by Jeff Bobo, a reporter for the Kingsport Times. Grainger County government also received a visit from members of the Tennessee Office of the Comptroller during its problems with balancing the budget. The meeting was covered by Grainger Today editor Tracey Wolfe. Certain information from these articles was used in the filing of this story.)