It looks like quite a few Tennessee counties have been taking budgeting lessons from the federal government — and that might ultimately mean bad news for many Southeast Tennessee taxpayers.
A report released in late November by the state comptroller found that many counties have been consistently spending more than they are collecting in revenue. Tennessee's 95 county governments brought in more than $11.6 billion for the fiscal year ending June 30, 2011. Meanwhile, the counties collectively spent more than $12.1 billion.
That means, as a whole, Tennessee counties spent about $490 million more than they could afford last year.
This trend of deficit spending by counties is getting worse. Total county debt in Tennessee "increased almost $1.41 billion from 2007 to 2011," according to the comptroller's report.
While the report didn't name individual counties, a quick glance at county budget documents revealed that several county governments in our area are spending well beyond their means.
Bradley County, according to annual budget reports, will operate $8.5 million in the red this year. Last fiscal year, the county ran an $8.8 million deficit, making Bradley County's spending habits the most concerning and unsustainable in the region.
During the last fiscal year, Franklin County officials burned through almost $70 million, but took in only $66 million in revenue. This year, the county expects to generate more revenue, but not enough to cover a spending hike that will push the county budget to nearly $72 million.
Bradley and Franklin counties are not alone. Sequatchie County is operating more than $2.5 million in the hole this fiscal year. State records indicate that McMinn County spent about $1.4 million more than it brought in last year. In Grundy County, local leaders ran a deficit of approximately $870,000 in 2011.
Hamilton County is one of the few bright spots in the area when it comes to deficit spending. The county budget is balanced this year and has generated a surplus in two of the past three years.
The comptroller's report notes that the biggest cause for this surge in deficit spending is failing to make adequate payments to bring down county debt. The debt then snowballs, much like when a person only pays the minimum payment each month on a hefty credit card bill. As a result, when the principal payments come due, the county isn't prepared to handle the large payouts it owes.
Paying for expensive building and maintenance projects through bonds and other debt may seem like a great deal in the short term, but if the county can't afford to pay the bill when it comes due, services are slashed, county employees are cut and taxes are increased.
Even the smallest counties, the comptroller points out, are the size of very large businesses. These large businesses are responsible not to shareholders, but their taxpaying residents. It is necessary, for the well-being of taxpayer and the stability of county governments, that our Tennessee's counties begin to budget more responsibly.