Jellico still treading deep water from 'financial storm'

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By Beth Braden

It was the perfect financial storm of a bad economy, bad estimates and bad sales projections, and the town of Jellico is still picking up pieces.

With the new budget season only four months away, Jellico Mayor Les Stiers is hopeful this year will be better than the last when it comes to generating revenue and preventing some of the problems the town has faced in the past six months.

“Annexation is still top on the list to grow this city,” he said Tuesday afternoon. The town first discussed annexation last winter and dropped the topic last spring.

Despite the vacant Rarity Mountain property going bankrupt, Stiers hasn’t given up on the possibility to develop that land into a mixed-use area. He said he has been corresponding with investors and bankers to look at bringing a truck stop and restaurant, as well as homes, to the mountain overlooking Newcomb. 

“They [investors] want to see something happening there at Rarity Mountain just like we do,” he said. “You’ve got to be a visionary.” 

The mayor says the board will still have to come up with its own ideas to generate revenue.

 “Any ideas would be great,” he said.  

Alderman Alvin Evans was hesitant to speculate on the town’s revenue during a phone interview last week.

“He [Stiers] shows us nothing about revenue, so I cannot tell you anything about revenue.” 

The revenue problems were as evident as far back as June 2012 when the LaFollette Press began covering workshops to discuss the 2012-13 budget. Even after three budget workshops, the town failed to pass a motion to approve the 2012-13 budget just ahead of the July 1 deadline.  The motion to approve the budget died because nobody was willing to second Mayor Les Stier’s proposal. 

On June 27, 2013, the board enacted a continuation budget approval to allow the town to operate despite a lack of budget.

“We have a tough couple days to think about it. You guys need to think about raising taxes, you need to think about annexation, you need to think about beer [sales] and be thinking about the sale of timber,” Stiers told the board in June. 

In October, the town failed to pay employees because of budget woes. 

An accidentally mailed insurance payment meant the town was $9,000 short of paying city workers on Oct. 15, according to the mayor. He cited falling revenues, fewer sales taxes and a lack of action on the board’s part as contributing factors to the shortfall. 

That month, the town began raising fees for various services. 

Outside fire services fees increased by $100 per year for residential and business customers. 

Sanitation fees, which can only be used for sanitation purposes were raised from $12 to $15. A group of people who hadn’t been charged sanitation were added to the roster to begin paying their $15. 

The board also deadlocked on selling the 70-acre lot behind the Jellico Community Hospital. The mayor cast the yes vote to break the tie. 

As of this week, surveyors are still working to establish boundary lines of the property in order to appraise it. 

“We’re still waiting to get back, hear back from the surveyors. They were marking the outer boundaries and perimeter,” Stiers said Tuesday. He expects to hear from the surveyors about the property within the next month. 

In November, two other parcels of land were declared to be surplus and were later auctioned off. 

Town attorney Terry Basista advised town leaders that selling the town off “piecemeal” wasn’t an option to solve revenue problems. 

The town approved higher fees of court costs. Previously, court costs for moving violations, speeding and public intoxication were $158.75. Those fees increased to:

Speeding - $233

Non-moving violations - $214.50

Other moving violations - $228

Public intoxication - $341.50 

Despite tight funds, the town was still able to provide all town employees with a $25 gift card to Save-A-Lot in time for the Thanksgiving holiday with funds from the sale of scrap metal. 

On Dec. 4, former town recorder Linda Douglas issued a resignation saying she’d done her job “to the best I can with all my work and time constraints,” she wrote in her resignation.

It also came to light that Douglas hadn’t been attending training to become a certified municipal finance officer, training that should have been completed by Jan. 1, 2012. Douglas had informed the board that her work schedule made it impossible to attend the training sessions.

December also brought new help to the municipal building in the form of Sondra Denton, a contracted CMFO who began wading through Jellico’s finance documents.

She found that fiscal year 2011 hadn’t been closed out, and bookkeeping for 2012 hadn’t been opened. 

One of the other finance discoveries included a large amount of Fuelman cards. Despite the town having only 21 employees, there were 38 active Fuelman cards. The town deactivated 18 of the cards. 

While employees of the Jellico Electric and Water System received bonuses at Christmas, employees of the town of Jellico didn’t. Instead they received a paid half-day off on Christmas Eve and on New Year’s Eve.

In January, employees learned their insurance had been cancelled.

While the payments had been withheld from checks, the money hadn’t managed to make it to the insurance carrier, resulting in lapsed policies. The mayor was unable to explain how the money was spent.

Finally, in February, the town of Jellico had a true picture of the 2012-2013 budget, and amendments were passed to finally balance the numbers.

The budget approved in July wasn’t accurate in any way, according to Denton.

“This is not a real budget. The figures are just too high,” she said in February.

Projected revenues allowed for a total $1.8 million for the fiscal year. When Denton untangled the books, she found that number to be much less.

It appeared that at least some of the budget problems stemmed from faulty numbers.

For example, $398,000 was budgeted for incoming property taxes for each of the last two fiscal years. Actual taxes collected for this fiscal year was $79,000.

The concept held true for the wholesale beer tax and the local option sales tax. 

Last summer, the town had planned on receiving $250,000 in beer taxes and $200,314 for the local option sales tax. Those numbers were amended to $100,000 and $26,982, respectively. 

And with the town just now coming to grips with the true numbers, it is time to begin the budgeting process for fiscal year 2013-14, a year that will have to operate closer to $850,000. 

Alderperson Pam Carbaugh and Vice-Mayor Venita “Cissco” Johnson did not return calls seeking comment.