Important message to citizens from Monroe County Manager Jim Hedges concerning the county’s past, present and future finances:
Some of you are aware my wife passed away last week and I am working from home for a few days and wanted to clarify, if that is possible, issues that are floating on social media regarding the Monroe County finances; such as why are we borrowing for certain projects while at the same time have money for other projects. Well, here goes, and remember I am working from home and don’t have actual numbers in front of me, so I am going from memory.
2014 SPLOST
To say the least, this was a really messed up activity. Normally, in developing SPLOST categories you start from the department heads. They forward proposed projects, i.e., vehicles needed, heavy equipment, and they are submitted in a project list. At a higher level, roads, water projects are added. Normally, the projected expenditures are significantly higher than what the SPLOST tax will generate, hence, the Commissioners along with the County Manager have the job of making sure the projected expenditures equal the projected revenues. For 2014, there was no project list, only a document with a list of projects and a dollar amount, such as roads, water, MCES, recreation, building, etc. The list was presented to the voters outlining by project and dollar amount what was on the ballot, hence, you now have a restricted expenditure project. ACCG recommends a consolidated proposal such as “$18.5M for roads, water, recreation, etc.,” which provides flexibility.
Everyone knows that the finances were in seriously bad shape in the summer of 2018, personnel changes were made and Lorri Robinson was hired as the Finance Director. It took her some time to get the books in order and what she discovered regarding the 2014 SPLOST was that expenditures were made and paid for out of the General Fund, instead of the SPLOST fund. In her reconciliation she repaid the General Fund $2.2M and instead of simply placing those funds in the everyday bank account, we created a reserve fund with One Georgia. Additionally, we discovered there was $1.4M in unrestricted funds and earlier this year the Commissioners agreed to spend $1.2M for much-needed equipment for Monroe County Emergency Services. There is approximately $200K of unrestricted funds from the 2014 SPLOST. Also, there was approximately $120K restricted funds for the Convention Center, and $700K of restricted funds for Recreation. Restricted meaning that funds can only be spent at the Convention Center and Recreation facility.
2020 SPLOST
The 2020 SPLOST went to the voters approximately three weeks after I was hired as the County Manager. Again, no project list, just a document with general project descriptions, i.e., Road, Water, etc.; no supporting project list. As is the normal practice, we went to the financial markets and issued bonds; meaning we have the money in the bank and repayment of the bonds is from SPLOST receipts over the next six years. However, since the 2014 bond revenue was handled so badly, the bonding company placed in the bond documentation that 80% of the 2020 bond proceeds must be spent within 36 months; hence some social media viewers claiming we are on a spending spree.
Juliette Water
In early 2020 the Commissioners were faced with planning on running water mains throughout the central and eastern part of the county. Several options were evaluated that included construction of a water treatment facility; and we knew that in order to proceed with a new District Attorney/Public Defender building we would need to include that requirement into the Juliette Water Bonds. In total, the Juliette Water Project is $16.3M, the DA/PD building was an additional $1.6M, connecting the northern water system to Forsyth was $1.5M, and the balance of $0.9M was contingency. The total bond was $20.3M. Next, the bonding company stated that in addition to the $20.3M funding from the bonds we had to spend our 2020 SPLOST water funds first, which was another $5M giving us just over $25M that in the bond documents clearly state we can only use these funds for water and buildings. The Juliette Water Project has more than enough funds to see this project to completion. This is how we have funds available for not only a new fire station at High Falls, but also on Rumble Road in the south which are both badly needed.
Landfill Cell
Just a few months ago we were informed by Harbin Engineering we needed to construct a new cell at the landfill; the cost was $1.7M, then $2M, then $2.5M, and finally $3.2M. We have no option other than finding the funding for this project. Remember, I stated earlier that we placed $2.2M in reserves with One Georgia; additionally, we placed another $1.5M in reserves stemming from our 2019 financial results for a total of $3.7M in reserves and the auditors publicly stating the Monroe County finances were in great shape. The Commissioners decided to pay for the new landfill cell with $2M from reserves, and to borrow the remaining $1.2M from ACCG. What is still to be determined is do we need to spend $750K that is included in the $3.2M estimate to create a berm around the base of the existing cell. This is not our call, and we have petitioned the Georgia Department of Natural Resources for an exemption. If granted, we will not need to borrow $1.2M from ACCG, and the Commissioners will have to decide if they want to borrow $500K or utilize additional reserves which would leave us with only $1M in reserves. We also received legal opinion that we cannot use any of the Juliette Water Bonds to cover the cost of the required new landfill cell.
Budget
For 2020, and 2021, I have cut the budget in several departments and this year the cuts were deep, leaving a few approved vacant positions unfunded. Remember the Juliette Bonds, we have debt payment beginning in 2021 of $500K and that is interest only, which will happen again in 2022 and then will go up to a $1.2M payment in 2023 to cover both interest and principal. Additionally, our 2021 debt service must also cover the first year of our Energy Savings loan of $500K. The 2021 budget saw increases in employee health insurance, worker’s compensation, and our general liability insurance premium. The combination of the landfill and recycling centers have an annual loss of $1.2M. Much of the cost of operating the recycling centers are related to personnel and, one can only imagine what these centers would look like without our part-time employees. The property tax rates remain constant at about 13 mils; however, our property taxes only equate to roughly 50% of our total revenues.
Currently, resurfacing of roads costs approximately $172K per mile, and going up. The TSPLOST tax would have generated approximately $3.6M annually resulting in the resurfacing of 20 miles annually. There is absolutely no way the annual budget can accommodate an additional $3.6M for road improvements. When calling for any referendum the Commissioners are prohibited from publicly supporting what is on the ballot; personally, they can, and reference is made to Commissioner George Emami’s letter to the editor.
As I look forward as to what is needed in 2022, additional funding to cover our debt service; we need to find an additional $900K annually for the next five years for MCES to replace aging equipment and additional personnel; and, it would be nice to have at least $1.8M annually for road improvements.
Hopefully, this helps address some of the social media comments.
