The Claiborne County Commission will be asked to decide during its Nov. 21 meeting whether to borrow $500,000 to cover the county’s 101 general fund balance until tax revenues are realized.
Resolution 2016-081, if duly adopted, will allow the county to take out tax anticipation notes on a temporary basis so that certain departments may continue to be funded.
Money from the 101 general fund covers the costs of salaries and expenses for the various courthouse offices and the Claiborne County Sheriff’s Department. The fund also holds monies to cover the costs of certain projects, like the recent waterline installations that occurred this year throughout the county.
According to the Claiborne Finance Office, the county has not been forced to borrow temporary funds to cover the annual budget since 2004. And, it may not have to do so, this time. Timing seems to be the main factor in whether any portion of the extra $500,000 will be needed as a ‘management tool for cash flow purposes.’
Historically, about 35 percent of the property taxes are paid by businesses and landowners by December. By the end of February, when taxes are due, approximately 58 percent more of the funds generated through property taxes are resting inside the county coffers, according to the Finance Office.
Section 9 of the proposed resolution states “That, if any of the notes shall remain unpaid at the end of the fiscal year of issue, then the unpaid notes shall be retired from the funds of the local government or be converted into bonds pursuant to Chapter 11 of Title 9 of the Tennessee Code Annotated, or any other law, or be otherwise liquidated as approved by the Comptroller of the Treasury or Comptroller’s Designee.”
Apparently, the loss this fiscal year of the revenues generated via the housing of state and federal prisoners is continuing to create financial problems for the county. The approximately $1.4 million shortfall was to have been remedied this fiscal year, in part, by applying the ‘bandage’ of a ten cents property tax hike.
However, a spokesman from the Claiborne Finance Office says the county will, no doubt, realize a zero fund balance going into the next fiscal year. The spokesman predicted the county budget committee will be in a “worse fix” when attempting to balance the 2017-18 budget.
Claiborne officials will need to take the ‘boar by the horns’ by making huge cuts in the next budget or by finding other means of revenue – possibly via another property tax increase or by borrowing money, said the spokesman.
If the county commission approves the tax anticipation notes, an approximate 2.5 percent to 3 percent interest rate will likely be applied to them.
Reach Jan Runions at 423-254-5588 or on Twitter @scribeCP.