With a vote of 16 to four, the Claiborne Commission approved the resolution last week to borrow $500,000 to cover any shortfalls that might occur in the county 101 general fund balance. This fund covers the costs of salaries and expenses for the various courthouse offices and the Claiborne County Sheriff’s Department. The general fund also holds monies to cover the costs of certain projects, like the recent waterline installations that occurred this year throughout the county.
Three county departmental payrolls coming due in December would have been in jeopardy, said commissioner Danny Longworth, if the resolution he sponsored had not been adopted.
The county has not borrowed temporary funds to cover the annual budget since 2004. And, it may not have to dip into the tax anticipation note very deeply over the course of the next year.
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 Claiborne Finance Office.
The general fund showed a balance of $457,000 on Nov. 21 – the day of the county commission meeting, according to county finance officer Sam Owens.
“As of right now, we are current on our bills. We are monitoring it every day,” said Owens.
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.”
Approximately 2.5 percent to 3 percent in interest will likely be applied to the tax anticipation note.
Commissioners Whitt Shuford, Bill Keck, Mitchell Cosby and Billy Johnson voted against the adoption of the resolution.
Commissioner Gary Poore was absent from the meeting, due to a death in the family.
In a related matter, the 2016-17 fiscal year budget was given the stamp of approval by the office of the state comptroller, via a letter dated Oct. 24.
“We have reviewed the budget and have determined that projected revenues and other available funds are sufficient to meet anticipated expenditures. Our review of the budget is based solely on the information we have received and is for determining that the budget appears to be balanced,” reads the letter, signed by Sandra Thompson, director of the Office of State and Local Finances.
In the letter, Thompson cautions the county to adhere to specific program statutes, guidelines and financing requirements in regard to the county budgets for education, roads and corrections.
Thompson also warns the county of a “concern” that could lead to future financial problems.
“As part of the annual budget submission process…the county provided a projected monthly cash flow statement for the general fund that showed the fund is budgeted to maintain less than one month of cash at the end of fiscal year 2017. The fund appears to have sufficient cash to remain balanced…,” states the letter, in part.
In order to maintain sufficient cash, the finance officer will need to provide the county commission with a couple of specific reports on a monthly basis, Thompson states in the letter.
The commission should receive an updated cash flow statement showing actual data from the prior month and any changes to forecasted data. A budget-to-actual report, including both revenue collections and expenditures, should also be submitted for the commissioners’ review, according to Thompson.
“We do recommend that the governing body be provided these reports for all funds as a best practice for a financially well-run county,” Thompson concludes, in the letter.
Reach Jan Runions at 423-254-5588 or on Twitter @scribeCP.