Walker’s cupboard is bare
Walker County government has a negative cash flow and is $70 million in debt.
While running for office, Shannon Whitfield knew that indebtedness was a given. What was unknown in the fall of 2016 was a dollar amount.
And the 2016 audit, a snapshot of the county’s financial health, does not paint a rosy picture.
A little more than six months into his first year as commissioner, Whitfield has found the county awash in red ink with a total debt of about $70 million.
The report, prepared by the accounting firm of Johnson, Hickey & Murchison for the period Nov. 1, 2015, through Sept. 30, 2016, and completed on July 20, 2017, shows the county presently is adding to, rather
than paying down, its financial obligations.
That is why Whitfield’s first budget since taking the reins of county government includes a tax increase of 20-25 percent for property owners.
“I think the biggest thing people need to be aware of is there is $7.5 million negative fund balance, which stated in the audit, is a $7.5 million negative position to pay our creditors and ongoing obligations as of Sept. 30, 2016,” he said. “So basically, it’s telling us we’re extremely underfunded to be able to even operate and have a positive cash flow.
“The folks at ACCG (Association County Commissioners of Georgia), in their training, state that a county’s fund balance should be two to three times its monthly expenses.”
“Our monthly expenses are around $2 million. We ought to have a $4 to $6 million positive fund balance and instead we’re negative $7.5 million.”
The county’s fiscal year begins on Oct. 1, and the commissioner is currently working to prepare a budget for 2018 that aims to lower debt levels while raising revenue without reducing services. But to accomplish that task may require a tax increase.
Crafting a budget — whether for a business, a household or a government — is never easy, but for someone drowning in red ink, it is like swimming against the tide while holding a brick of debt in each hand.
Whitfield has been trimming costs at every turn since taking over the helm of government in January, but changing course — much less making headway — takes time.
Careful budgeting has had a significant effect on reducing day-today operating expenses, but have all the easy cuts been made? Payroll reduction has been a plus, and profitability at the landfill is not only welcome, it shows change is possible.
“It further drives home the point that the landfill has been highly mismanaged, showing losses of over $600,000 a year,” Whitfield said during a July commissioner’s meeting. “As of June’s income statement though, we’ve turned that into a profit for the month.
The commissioner said this past June was probably the first time in 16½ years that the landfill had shown a profit.
“It shows what we’ve been talking about for months,” the commissioner said. “The county is $70 million in debt. Those are real numbers and the audit backs up what we’ve been saying for well over a year — that we have a very high level of debt compared to our revenue stream.
“So basically, if we stayed on the same course and pace, it will take us over 20 years to pay our way out of this debt, since we’re already paying out over $2 million a year in interest charges. So, in the next few days, we’ll be talking more about a plan to be able to get this county completely out of debt in 10 years.”
Collections of optional sales taxes have fallen in recent years, partly due to the county’s small retail base compared to nearby counties in Georgia and Tennessee, and partly due to a greater share of those funds being allocated to Walker County’s four municipalities.
The auditor’s report shows revenue for 2016 remained fairly constant compared to 2015, but at the same time property tax collections increased 43 percent while optional sales tax revenue decreased by about 7 percent.
The greatest expenditures were for health and welfare (24 percent), the sheriff’s office (18 percent), public safety (16 percent), public works (13 percent), general government (12 percent) and judicial services (9 percent), according to the audit.
The remaining total of 8 percent was spent on interest payments for long term debt (4 percent), housing and development (2 percent), intergovernmental payments (1 percent) and recreation and culture (1 percent).
In addition to the budgeted items, the commissioner had no way of anticipating costs associated with environmental protective action made necessary when E. coli was discovered at one of the county wells. Neither were increased charges to treat sewage at the Moccasin Bend Treatment Plant, charges swollen by increased volume due to storm water infiltration of the sanitary sewer system.
While no one favors hiking property taxes, raising property taxes is more than a possibility — the upcoming budget is based on a higher millage rate.
But much like the county debt, exactly how much is unknown at present.
Property tax increase public hearings announced
Public notice of a proposed millage rate increase (25.58 percent in unincorporated and 20.05 percent in the incorporated areas) for Walker County land owners can be seen on page A8 in the upcoming Wednesday edition of the Walker County Messenger. Public hearings regarding tentative increases of about 2 mills will be held on Aug. 17 at the LaFayette-Walker County Public Library, on Aug. 19 at the Civic Center and on Aug. 24 at the Commissioner’s Office.
Filling county coffers
Walker County’s 2016 property tax rate was 24.469 mills for its unincorporated areas. Of that amount, 7.838 mills is collected for the county’s general fund while more than double that amount — 16.631 mills — is collected to run Walker’s school system.
In addition to taxation for funding its schools and general operations, state law allows the county to collect up to 7 mills annually to provide health care services to indigent residents and others entitled to hospital care.
Walker County Tax Commissioner Carolyn Walker has done research that show Murray and Catoosa counties being the only ones within a 10-county area that have lower overall rates. Catoosa has a rate of 7.295 mills as the county government portion and a total millage of 25.987, meaning their total tax rate is slightly higher than Walker’s.
Nearby Floyd and Whitfield counties have combined property tax rates in excess of 30 mills.
If adopted, taxes for a home with a fair market value of $100,000 will increase roughly $76 in unincorporated and $83 in incorporated areas.