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County to borrow money to pay bills

Published 1:26pm Saturday, September 22, 2012

COURTLAND—For the first time since 2001, Southampton County officials will ask a bank for a line of credit of up to $3 million to pay its bills.

Assuming the entire amount would be borrowed and paid off within 90 days, the interest would be $9,675.

“”You’d never draw all that down,” said County Administrator Mike Johnson.

County Treasurer David Britt on Sept. 13 informed Johnson that cash flow will likely be insufficient to cover anticipated expenses for September, October and perhaps November.

“We only collect revenue (taxes) once a year and many (municipalities) collect them twice a year,” Johnson said. “It’s always close in September, October and November.”

Bills for real estate taxes were mailed last month, while personal property tax bills will go out in October, he said. All taxes due on Dec. 5 will generate $18.5 million for the county’s $54 million budget.

Franklin District Supervisor Barry Porter said he would support the line of credit.

“I think that we have to pay our bills,” Porter said. “The problem has been that our reserve has gotten so low and that we don’t have access to funds. We collect our taxes in December. You have to go pay the bills all throughout the year.”

“We are working long term to try and prevent this in the future,” he added.

Newsoms District Supervisor Glenn Updike said he doesn’t like borrowing the money, but it’s the lesser of two evils — either pay the bills or default on them.

“Our hands are tied,” Updike said. “We don’t have any other choice. This is after the fact. If we default, it would hurt our credit ratings. To me, it is evidence that we have to get spending under control.”

Law allows localities to borrow money in anticipation of collecting taxes as long as the loan does not exceed expected revenues.

Britt sought proposals from three banks. SunTrust offered the best rate. The county can make two draws a month, but will have to pay a $6,000 up-front fee to the bank.

 

  • sgeary

    No one yet has brought up the fact with respect to saving money that the county is fined by the state each month for not having a proper stray dog facility. I think I heard to the tune or $35,000 and if one is not done or the old one brought to code by Jan. 1 we will face a $350,000 fine in addition to the $35,000 we have been paying for quite some time now. Let me guess no one has a clue as to what I am talking about. Just like the county wants it!

    Suggest Removal

  • kingradman

    This is everything to do with poor management! What other city does this? The County doesnt know how much money and when its coming in? come on! Really?

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  • Ethan

    I don’t think any of you have any understanding of what this is about. It has nothing to do with poor budgeting or over spending. Budgets (whether corporate or government) do not have a schedule built in. The budget reflects estimates of revenue and expenditures and as long as the expenditures don’t exceed the revenue, the budget is balanced. The problem is the County’s expenditures occur each at a relatively constant rate each and every month. Revenues, however, don’t because real estate and property taxes are collected only once per year. I am paid twice a month and I can cover all my bills as they arrive. However, if my employer suddenly decided to pay me only once per year and my next paycheck wouldn’t come for 12 months, then I wouldn’t be able to pay my bills until then. Sure that paycheck would be very large and would be enough to pay all my back bills. But in the meantime I would have to borrow money to get by unless I had enough in savings to cover my bills during this period. This would not be an indication that my budget was bad or that I was overspending. This is the situation the County is in. Their reserves (savings) isn’t enough this year to continue paying bills until the taxes are collected. Once they are collected, they can easily pay the back bills plus the bills for the remaining part of the fiscal year.

    The simple solution is to collect the taxes twice a year. This is not uncommon in the state. People who pay their real estate taxes through their mortgage escrow wouldn’t notice a thing and people who do make payments themselves would at least not face such a large tax bill all at once each year. This saves the County the interest they would otherwise have to pay on a loan and save the effort by County employees and the Board of Supervisors in getting the loan.

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    • kingradman

      I know this much, as a business owner, you have a monthy budget meeting , and look at where we are year to date and where we are on the budget. Where do we need to cut to fall in line.

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  • kingradman

    GOOD GREIF, Mr Jones meant the Money was at SUNTRUST!!

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  • truthseeker

    Without bringing it up to the supervisors at a meeting, Mr. Johnson drew up and signed a contract for Vernie Francis for a year, automatically renewable. Why do we even bother to have supervisors if Johnson wants to run the show???

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    • FromHere

      Sounds like somebody needs to put some reins on him.

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  • Dakota01

    Were is all that money supervisor Jones said the county had? They should send him to go find it or maybe the TN should interview him again.:0

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  • truthseeker

    Until the board of supervisors takes control of spending away from Mr. Johnson, he will continue to spend every dime the county has, and then some. Some of the new board members got stupid after they took office and forgot why their constituents put them there.

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    • FromHere

      One example would be the $1800 we were paying the former sheriff to check the emergency system radios, the questions and pondering over this for months, then giving it right back to him.

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  • blackwaterpete

    As sorrowful as I am about this it is time for me to move to another county where they know how to handle the money. I applaued the new board for trying so hard to get it right. But the old board and way they handled the money in this county put us where we are. Now I am wondering if our departments are going to get covered. IE Sheriffs, Maintenance, Courts Clerks. I thank those on the board who gave up thier pay. For the other two who did not. Shame on you for not joining in and showing the public what you are made of.

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    • bobs94

      Why should they give up their meager pay? It is symbolic at best. Hell, lol, the best thing I ever did was move away from that area.

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  • bobs94

    It doesn’t matter if taxes are collected yearly or monthly. That is the reason for a budget. You don’t spend money that you don’t have. Cut your spending and the problem will fix itself.

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  • drewandmol

    Hmm, I remember just reading an item right here in the TN where Supervisor Jones said the county wasn’t broke and they had plenty of money to fall back on. Interesting. Maybe he will want to give up that paycheck after all.

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    • FromHere

      I remember him saying that too. I wondered where the money suddenly came from.

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