Tuesday, May 30, 2006

Million Dollar Budget Errors, Growing Deficits

A very real concern for local taxpayers is being mostly ignored and rising costs of operations at almost every level of Hamblen County government indicates a major tax increase is on the way.

One county commissioner has been actively trying to correct the problems in accounting and budget records, literally catching million dollar mistakes, though Commissioner Linda Noe is often dismissed by others on the commission and on county government as some sort of loose cannon. It's obvious however that her efforts continue uncover serious problems.

Commissioner Noe's blog has been focused of late on what she calls a "perfect tax storm" and here are some excerpts:

Our first budget meeting on May 16 got us off to an odd start as we looked at the county debt budget for next year. About midway through the discussion, I pointed out that there was a $1,000,000 error (yes, that's one million dollars) in the debt payment budget we had just been given for the 06-07 budget year.

The budget we had been given showed that our debt payments would be a little over $1,300,000 in 06-07. I asked Finance Director Nicole Epps to check her figures and see if debt payments would actually be closer to $2,300,000.

Nicole looked back through debt information, did some calculations, and then told us that, yes, one debt payment (line-item) was "off" by $130,000 and, yes, another debt payment (line-item) was "off" by $870,000, and, yes, the total general debt payments would be $2,300,000 (instead of the $1,300,000 we had been given).

We got the corrected debt payment budget at our May 23 meeting. What a rude awakening there would have been down the road if we had approved the debt budget with the $1,000,000 error!

We also discussed the overall county debt. The total debt is about $46 million in principal alone (not including yearly interest charges that have to be paid). And that $46 million county debt figure does not include any of the huge M-H hospital debt that is kept in a separate debt fund.

In discussing the county debt, I asked whether the county had just been paying interest only on the four big $10 million dollar bond issues. Joe Ayers of Cumberland Securities answered "yes."

What this means is that over the past 6-7 years, we have added $40 million worth of debt but we have yet to pay a dime toward the principal of that debt. We are currently scheduled to start paying down this $40 million bond debt in 2009."

Here's another entry:

If the revenue and expenditure figures do not change a lot in the next few weeks and if we keep approving all the spending that is in front of us, then we will be looking at a deficit general fund budget for 06-07. We will have slowly approved spending more than we expect to take in.

And that would be a deficit budget before there is any talk at all about pay raises or the school budget!

It's full steam ahead to approve all the spending increases and then saddle the taxpayers with higher tax rates this year on top of last year's higher property appraisals--the old double whammy right in the pocketbook."

And again, it's noted that budget figures presented to the full commission are based on one set of estimates via the county mayor's office versus basing them on the correct audited figures available.

Using the computer records means that we are using unaudited and uncorrected numbers even though Commission adopted audited-based budgeting years ago for the purpose of having the most accurate available record of county spending in front of us during each budget cycle.

All the historical spending (02-03, 03-04, 04-05) that commission has been given comes from unaudited/uncorrected computer records even though audits for all three of those years were available on March 31.

This commission wanted and voted for more accuracy in the budgeting process by adopting audited-based budgeting, but we didn't get it.

It is unfortunate that the County Mayor and his Finance Department have snubbed the entire Commission.

Actually, it is more than unfortunate and it is more than a snub.

Taxpayers, too, deserve to know that the most accurate records available --audited records--are given to their commissioners and are used by the County Mayor and the Finance Department in the budget cycle.

This is just one of the reasons I spoke yesterday of the mess we are in after just three budget meetings."

As I have mentioned before - ignoring these critical funding discrepancies is perilous for taxpayers.

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