Committee Projects $300,000 Shortfall on School Bond Issue

Huntsville, TN (2017-05-15) The Scott County Budget Committee has been working for more than two months on the budget for the 2017-2018 fiscal year which begins on July 1; however, several obstacles still remain before the working draft will be presented to the county legislative body.  One of the looming issues is a significant revenue shortfall to repay debt incurred on construction projects at Burchfield and Robbins Elementary schools and Oneida Middle and High School.

Trent W. Cross, Chairman of the county’s Budget Committee, told fellow Commissioners Monday night, the committee intended to finalize a draft of the proposed budget sometime in June; however, presentation of the working draft was subject to variables out of the committee’s control.  According to Cross, the committee has decided to wait for the county’s Board of Equalization to determine final values on several properties that were recently reappraised.  The committee is also awaiting a final determination of the actual percentage of tax revenues collected last fiscal year.

As the committee forges ahead, Cross said the county general budget was largely balanced absent any final changes; however, the county was facing a substantial shortfall in revenue to repay outstanding school bond obligations.  Recent interest rate hikes have significantly impacted the county’s revenue-starved budget, but one of the most ominous is the potential lack of revenue to retire the $13.9 million dollar loan taken out to build and renovate the Burchfield and Robbins Elementary Schools, and the construction of the addition at Oneida Middle and High School.

When those projects were undertaken, tax revenues were insufficient to fund the debt without a significant increase in property taxes.  With bond payments looming, the administration at the time opted to support a wheel tax referendum to amortize the debt.  The citizens of the county responded by resoundingly supporting that referendum.  With interest rates at historic lows, the administration arbitrarily suggested a $30 wheel tax fee, which, at the time, would easily pay back the debt.  However, recent interest rate hikes have reportedly exceeded wheel tax collections and the county could be facing a significant shortfall in revenue next year.  “We have a pretty large deficit on the bonds because of the interest rate increase,” Cross said.  Based on current projects, the committee estimates the shortfall to be about $300,000.

Since the wheel tax cannot be amended to compensate for the shortfall, the county legislative body is limited on its options.  It can either impose a second wheel tax to generate additional revenue or add the burden onto property tax payers.  A new wheel would either have to be approved by referendum or imposed by a 2/3 majority vote of the county legislative body at two consecutive meetings.  Given time constraints, a referendum vote most likely couldn’t be arranged in time to pass a budget.

If the shortfall is placed on landowners, the property tax increase would be roughly ten cents.

In related business Monday night, the county legislative body appointed Freddie Griffith to the Scott County Board of Equalization.  Griffith replaced Jobe Jeffers.

Other actions taken Monday night included:

  • Appointment of Diane Smith to the Scott County Parks and Recreation Committee.  Smith will replace Kimberly Kidd, who likewise represented the school system’s interest on the board;
  • Accepted the 2017-2018 Tennessee Department of Transportation Litter Grant in the amount of $44,200;
  • Approved the reappointment of Jerry Slaven, Dave Cross, and Melvin Stephens to the Scott County Audit Committee.  Slaven will serve a one year term, while Cross and Stephens will serve two and three year terms, respectively; and,
  • Approved the purchase of approximately ½ acre of property in the Robbins community to fix a slide problem on Old Sawmill Rd.  The property was valued at $3,000 per acre.