Hamilton County mulls ditching discretionary spending

photo Hamilton County Mayor Jim Coppinger speaks in this file photo.

BY THE NUMBERSDiscretionary spending figures for the current fiscal year as of Nov. 14.Name // previous discretionary // bond moneyRandy Fairbanks* //$36,431 // $0Jim Fields // $2,014 // $0Marty Haynes // $4,117 // $17,000Warren Mackey // -$4,000 // $0Greg Beck // $600 // $0Joe Graham // $3,347 // $47,242Sabrena Turner // $0 // $19,899Tim Boyd // $0 // $0Chester Bankston // $0 // $59,098Totals // $42,509 // $143,239

photo Tim Boyd

When Hamilton County passed its 2014-15 budget this year, some conservative commissioners and good government groups lauded changes to the $900,000 in funds handed out annually for commissioners to spend on local projects.

The measure bound the discretionary money to public projects, increased scrutiny on spending and, by drawing the funds from credit and later bond revenues, freed up money for general government.

But seven months ahead of the next budget year, one Republican commissioner is saying the funds need to be moved back to the general fund - or ditched completely.

Commissioner Tim Boyd says drawing discretionary funds from the county's $90 million line of credit and later converting that debt to 15-year bonds means taxpayers eventually are paying interest on that money. He's not sure that's a good use of taxpayer dollars.

"We don't need to be paying 15 years of interest on discretionary funds. Let's spend it out of the revenue in the coffers and if the money's not there, don't have the discretionary," Boyd said. "We don't need to be borrowing money for the discretionary funds."

He said the discretionary expense policy needs to be reviewed during the upcoming budget process, which will start early next year.

"I think we all inadvertently passed that and didn't really think about it as much as we should have," Boyd said.

Hamilton County Finance Administrator Al Kiser said Thursday that the interest rate on the county's line of credit varies over time and is currently 0.365 percent. At that rate, if commissioners spent the entire $900,000 this year, the interest accrual would be about $3,200, he said.

If the interest rate were to spike, the county would convert the debt to bonds. The last time the county went to the bond market, in 2013, it got an interest rate of 2.02 percent, Kiser said.

Mayor Jim Coppinger said it's too early to make final decisions about the 2016 budget, which starts July 1. But he said making the discretionary spending subject to bond restrictions was a conscious decision.

"The purpose of doing that on the front end was to make sure the money was being spent on projects that are bondable, in other words, spent on public projects that last a while."

Previously, commissioners could spend the money on any project they desired, such as making donations to nonprofit groups, buying equipment for neighborhood organizations or buying athletic uniforms.

Under the current rules, discretionary funds can only be spent on structures or properties that are open to the public, such as schools, parks or fire halls. Projects also have to last at least 15 years - mainly buildings or large equipment.

Coppinger also was glad to hear that a commissioner was willing to give up the discretionary funding.

"I'm excited to hear that Commissioner Boyd shares my concern and would be willing to forgo any further commission spending," Coppinger said.

Commissioner Joe Graham, chairman of the commission's Finance Committee, says that putting bond restrictions on discretionary spending was a good move.

"I just think that's the best use of the money, and not using it as donation money for certain organizations," Graham said. "I applaud the mayor for moving those [to bonds], and I think they shouldn't be back in the general fund."

Good-government groups say using bond restrictions may not be the only way to check discretionary spending. But strict guidelines need to be in place - especially since Hamilton County is the only local government in the state that allows individual legislators to direct more than $5,000 a year.

"This shouldn't just be a slush fund for the commissioners, so setting some publicly discussed and consensus rules is a good idea," said Dick Williams, of Common Cause Tennessee, a nonpartisan, nonprofit good- government group.

Long-term projects are typically better than those that benefit a smaller number of people over a shorter amount of time, he said. But Williams said he didn't see it as "exclusively better."

"Maybe they should ask for comment from the public and take that into account as a commission," Williams said.

This is not the first time commissioners have balked at the idea of keeping discretionary spending bondable.

In July, Commissioner Warren Mackey said the bond rules tie the commissioners' hands and prevent them from being able to give taxpayer dollars to nonprofits they deem worthy.

But Mackey's concern was too late. The commission had passed the budget without debate a month earlier.

And then-Commission Chairman Fred Skillern said that moving the $900,000 out of the general fund helped pay for the 2.5 percent raise county employees received this year.

As of Nov. 14, commission records show that four commissioners have spent a combined $143,239 in bond funds, with Chester Bankston and Graham making up more than half of that sum. Bankston has spent $59,098, while Graham has spent $47,242. Commissioner Marty Haynes has spent $17,000 and Sabrena Smedley has spent $19,899.

More commissioners have spent money from their other accounts - the unrestricted discretionary money they had accrued from previous years.

Six commissioners have spent $42,509 altogether, although $36,431 of that sum was spent in District 1, by Skillern, Randy Fairbanks' predecessor. And Mackey's account grew by $4,000 due to a few canceled checks from last fiscal year.

Contact staff writer Louie Brogdon at lbrog don@timesfreepress.com, @glbrogdoniv on Twitter or at 423-757-6481.

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