County commissioners differ on spending PILOT money

County commissioners differ on spending PILOT money

April 12th, 2011 by Dan Whisenhunt in News

In this file photo, Hamilton County Commissioner Larry Henry participates in a county commission meeting at the courthouse.

Before the nine Hamilton County Commissioners decide what school projects the county will fund with payment-in-lieu-of-taxes money, they must first resolve if they want to divide the money up nine ways.

Commissioners say they are keeping money generated from payment in lieu of taxes agreements to pay for school construction, but according to their own resolution, the money could be used for other purposes.

A committee set up Commission Chairman Larry Henry will meet at 1 p.m. to discuss how to spend the PILOT funds. Committee members are Commissioner Warren Mackey; Board of Education member David Testerman; County Finance Administrator Louis Wright; County Auditor Bill McGriff; Christie Jordan, director of budgeting and accounting for the school system; and another school finance official.

The commission's resolution, approved in February, that outlines the plan for the PILOT funds states the money will be "segregated and designated exclusively for the capital improvement, maintenance, acquisition of real property, construction and identified special needs" of the schools.

And what are "identified special needs"?

"It's up to the commission to determine what a special need is," County Attorney Rheubin Taylor said, adding that Board of Education members also could determine what a special need is. Under the resolution, the commission controls the money and can vote on how it is spent.

Commissioner Greg Beck says money generated from PILOT agreements will be divided among commissioners for projects of their choosing. Commissioners currently receive $100,000 each in discretionary money each year to spend on projects of their choosing.

Beck, who voted against a plan withholding the money from the Hamilton County schools operating budget, said the plan could allow the nine commissioners to cherry-pick projects in their districts.

"It's yet to be seen whether it's going to be equitable," Beck said. "We're all entitled to one-ninth of the PILOT money."

Commission Chairman Larry Henry disagrees, and says those requests will be driven by school needs and not commissioner wants.

"I think it would have to come from the school board," Henry said. "I don't think the individual commissioner would do that."

But commissioners Warren Mackey and Mitch McClure said they think commissioners might have some say in choosing projects to fund with the PILOT money.

PILOT funds come from tax breaks offered to lure local businesses like Volkswagen. The commission adopted Commissioner Joe Graham's proposed resolution keeping the money for construction amended his resolution to keep the money until the county formally decides what to do with it. School officials, who are facing a $14.3 million revenue shortfall, have asked that the money be put in the school system's operating budget.

When he proposed the resolution, Graham's emphasis was primarily on school construction to meet the growth needs of the school system.

Graham said a special need "could be anything" from roofs to heating and air conditioning units. Henry said the money could be used for "any emergency need."

Like Henry, commisssioners Fred Skillern and Chester Bankston also think school board priorities should dictate how the money is spent. All three said the school system would identify their capital needs and approach the commissioners for funding.

Graham said he isn't sure whether commissioners could identify projects to be paid for with PILOT money.

"I guess we'd just have to do our research on that," he said.

Commissioner Jim Fields said he'd never considered the question. McClure said the needs would be determined in the course of the school system's budget process, but said commissioners also could identify needs in their district.

Mackey said he's already identified a need that could be paid for with PILOT money. But he suggested that would be conveyed by individual meetings between commissioners and school board members, where commissioners would make their preferences known. Mackey wants a high school between Missionary Ridge and the Tennessee River, saying it's something residents in that area have mentioned to him.

Mackey said he can see where commissioners could drive requests "within limits."

Superintendent Jim Scales said "there needs to be some conversations" between the school board and county officials about how the money will be spent if the county decides to keep the money. Henry last week announced the formation of a committee comprised of county and school officials to discuss how the money would be spent.

School board attorney Scott Bennett said whether commissioners will divide up the PILOT money nine ways is an "interesting question," but said it's ultimately a political discussion. He said historically, the money has gone into the school system's operating budget.

Beck said ultimately commissioners listen to the constituents in their district.

"I represent 35,000 people who are going to say, 'Wait a minute. Where's our share of the PILOT money?'," he said.