NASHVILLE —The state comptroller told Jellico officials today (Tuesday) he is uncomfortable with inflated revenue projections and would need to further review the town’s budget before it could be accepted by his office.
“I’m very nervous about these revenue estimates,” said Justin Wilson, Tennessee’s Comptroller, who oversees government spending in the state and its municipalities. ”…the entire [budget] and particular the fines and forfeitures.”
In its initial June 14 letter summoning the Jellico Board of Mayor and Alderman to Nashville, Jellico officials were told to defend the additional $300,000 it projected to received from fines and forfeitures this fiscal year.
During the 2012-13 year, the town only collected $130,000 in fines.
The comptroller questioned whether town officials would have a quota on issuing speeding tickets and levying other fines to pad its bankrupted coffers.
Jellico Mayor Les Stiers insists the town isn’t setting a quota—rather, he contends the projected revenue is a realistic picture of what the town can collect, presuming violators pay each ticket in its entirety. Stiers also presumes the town judge won’t reduce any fines.
The mayor calculates that if just 60 percent of ticketed individuals pay their fines, the town could raise a total of $467,376—about $50,060 less than what the mayor says is mathematically possible. Those figures were based on his own projections, which essentially presumes officers will write at least seven tickets each day.
While Mayor Stiers and Alderman Darrell Byrge told Wilson they were uncomfortable with the projected increase, Alderpersons Venita “Cissco” Johnson, Pam Carbaugh and Charles Vermillion were skeptical—but hopeful.
“It’s a high number, but I have confidence in the police department,” Vermillion said.
Wilson stroked his chin as he listened to the board share their thoughts.
Increasing fines has proven little success at increasing revenues in other towns, the comptroller said.
“You know we’ve had increases in other jurisdictions, budgets for fines and forfeitures across the state, and I’ve never seen a jurisdiction be successful with an increase of this magnitude,” Wilson told them.
The comptroller will review the submitted budget and evaluate revenue over the next six weeks. The comptroller did not rule out another Nashville meeting depending in the results of his review, which could scheduled near the first of September.
The board was instructed to return to Jellico and call a meeting to fix its Monday-evening blunder.
EARLIER THIS WEEK
With part-time certified municipal finance officer Sondra Denton and Town Attorney Terry Basista absent just a day before the board was expected to meet with the comptroller, Evans began picking through the projected budget numbers.
Denton’s projections were too low, Evans said.
“I’m just not gonna go in with a 50-cent tax increase when we’ve got maybe $150,000 or more [in potential revenue],” he said.
The board voted to ax the 50-cent property tax hike from the budget, but rescinded a clause about property taxes. On paper, the property tax ceases to exist until the original $1.15 is re-added to the ordinance.
The budget—minus the property tax clause—passed, with Darrell Byrge casting the only dissenting vote.
After Monday’s meeting, the group seemed uneasy about what would happen in Nashville.
“I’m scared to think [of what will happen]. They need to clean it up,” said Carbaugh. “If they don’t clean it up, it’ll continue.”
Charles Vermillion wasn’t sure what would happen either.
“Have no idea,” he said following Monday’s meeting.
And the mayor was just ready to get the meeting over with.
After Tuesday’s meeting, the board members were still unsatisfied.
“The way it sounds, no other choice or they’re gonna step in and take over,” Johnson said. “We’re basically back to square one.”
Carbaugh said she had hoped the comptroller would address the way money is spent.
She, Johnson and Vermillion said the meeting was not productive.
Stiers declined to comment.
Tuesday’s visit to the comptroller was the culmination of more than a year of financial woes in the mountain town of just more than 2,000 people.
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, 2012 deadline. The motion to approve the budget died because nobody was willing to second the mayor’s proposal.
On June 27, 2012, 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 and be thinking about the sale of timber,” Stiers told the board last summer.
In October, the town failed to pay employees.
An accidentally mailed insurance payment meant the town was $9,000 short of paying its employees 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 yea vote to break the tie.
As of this week, little progress has been made on surveying and appraising the land.
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 the 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 last 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.
In May, the LaFollette Press examined a year’s worth of the town’s bank statements. Jellico ended the day with a negative bank balance more than 10 times in 2012.
The mayor said to expect an upcoming special called meeting to repair the property tax clause in the budget.