Walker County property taxes going up 13 percent

Walker County Commissioner Bebe Heiskell talks to people at her table during the Walker County Republican Party Convention on March 14 at the Walker County Civic Center in Rock Spring, Ga.

2014 North Georgia millage rates

Bartow County: 9.680Catoosa County: 6.598Chattooga County: 12.446Dade County: 8.179Fannin County: 4.794Gilmer County: 7.224Gordon County: 9.747Murray County: 7.270Pickens County: 7.220Walker County: 7.725Whitfield County: 6.061Source: Georgia Department of Revenue

Statement from Walker County Attorney Don Oliver

The County had to borrow short term money earlier in the year in order to honor its guarantee of Hospital debt, which obligation was suddenly thrown upon the County because of adverse rulings in the federal court case with Erlanger. That short term debt was the only option available on such an emergency basis, with the County’s yearly budget already set. This short term note, by law, has to be paid in total by 12/31. To pay it all at once would require a huge one time tax increase. Of course Commissioner Heiskell does not want to put that huge one time burden on the citizens.From the day the County took out the short term note to pay the hospital debt, Commissioner Heiskell said if the hospital could not repay the debt by budget setting time, she would try to roll that short term debt into a longer term note, the payments on which the County could either absorb into the yearly budgets, given sufficient economic growth, or pay each year with a one time very small tax increase that would be carried forward each year for the term of the note, if needed. It is time to set the budget and levy next year’s taxes.The county continues to work on all possible options. Every bank of course wants loan security, and that security is the pledge of the additional County tax, if needed. The County can only pledge any tax beyond 12/31 of any current year through an Inter-Governmental Agreement (IGA) with an Authority where legislation has authorized such a pledge. The Hospital Authorities Law allows such a pledge via an IGA between the County and the Hospital.The Hospital Authority voted to agree to enter such an IGA with the County so the County could in turn pay the Hospital’s debt guarantee via those pledged taxes if the County needed such a pledge for security in order to roll this short term note into a more manageable long term note. The vote was merely an agreement to agree on such an IGA, if needed. If the IGA is ever done, it poses no new debt obligations on the Authority or County, but merely allows the County to convert the already existing short term emergency debt into a more manageable long term note that is better for the citizens. If the IGA is done, the Authority will owe nothing it does not already owe.The analogy is rolling a temporary 120 day home construction loan into a longer term mortgage so the payments will be manageable.”

With a $10 million bill due at the end of the year, Walker County Commissioner Bebe Heiskell will raise property taxes.

Heiskell said Tuesday she is boosting the Georgia county's millage rate by 1 mill - a 13 percent increase from last year's rate - as she sets the budget in the coming weeks. For a resident with $200,000 worth of property, the hike will bring an extra $80 per year to the county.

This marks the second summer in a row that Heiskell has increased property taxes. Last August, she boosted the rate by 64 percent.

Before that, the county property tax rate had been almost flat through four years. From 2010-13, the millage rate dropped from 4.918 to 4.705. She now blames that period for the county's current fiscal woes.

"My biggest problem that I've done wrong in my administration was not raise taxes over time," said Heiskell, who has been in office since 2000. "I never did it."

The county government needs more money because Heiskell took out a $10 million tax anticipation note - a loan, essentially - in March. Walker County must pay that money back by the end of the year.

Heiskell said several times this year that she probably would not have to raise property taxes. In January, after news that she owed creditors about $4.8 million, she said in a Facebook video, "I managed to not raise taxes through the Marsh crematory or the tornadoes or the floods or the ice storms. Just because we owe a debt does not necessarily mean I'll have to raise taxes."

Then in March, after receiving the tax anticipation note, she said raising property taxes would only happen as a last resort, that she was "almost positive" she could keep the tax rate the same next year.

In part, the county needed that tax anticipation note to pay back a different loan. The county had guaranteed about $4.8 million in loans from Regions Bank and Erlanger Health System to Hutcheson Medical Center. That money was supposed to help the Fort Oglethorpe hospital pay its employees.

If the hospital couldn't pay the money back, Heiskell promised that the county would pay it. In November, about a month before the loans were going to be due, Hutcheson filed for bankruptcy, leaving Walker County taxpayers holding the bag.

In March, Heiskell took out the tax anticipation note from Rosemawr Municipal Partners, a New York investment company. Some of the money paid back the loans from Regions Bank and Erlanger. But it also left Heiskell the option to withdraw an extra $5.2 million.

She took that money out, as well. She said Tuesday that she needed that money for basic government functions, like paying county employees.

Now, Heiskell has five months to pay that $10 million back to Rosemawr, a significant debt for the county. Simply paying the investment company straight up would account for half of the county government's projected tax revenue this year.

If the county doesn't pay the money back by the end of the year, the interest rate on the debt will increase from 4.5 percent to 6.4 percent. As it is, the county already will pay about $200,000 in interest, assuming the county makes good on the $10 million by the end of the year.

So Heiskell has decided to increase property taxes. But the slight bump she says she's going to do won't pay back all of the money. She said the 13 percent increase will net her about $1.3 million.

For the rest of the money, Heiskell said she plans to issue a bond. This would be a long-term investment. Creditors would expect a little bit of money every year for several years, which would be a relatively manageable debt for Walker County.

County officials are negotiating with banks right now, trying to find a group that will loan money. But investors want to know they will get their money back, eventually. So the county would have to promise that some of its tax revenue two, three, four years from now will go to those investors.

"The county continues to work on all possible options," County Attorney Don Oliver said in a statement. "Every bank of course wants loan security, and that security is the pledge of the additional County tax, if needed."

But Heiskell can't make such a promise, not past this year. However, she has another option: an intergovernmental agreement with Hutcheson. Through a partnership with the bankrupt hospital, Heiskell can promise to give more taxpayer money to creditors in future years.

Last week, the governing body of Hutcheson voted to promise to enter into an intergovernmental agreement with Walker County. They aren't actually in an agreement right now. The hospital's leaders just promised to join into an agreement with Walker County, assuming the county needs them to later this year.

And that is assuming creditors would be willing to give money to Walker County. That money would go toward paying off Rosemawr, which gave Walker County money to pay off Regions Bank and Erlanger.

In other words, this would be a loan to pay off a loan to pay off a loan.

If this third loan comes in the form of a bond, Heiskell worries the interest rate will not be favorable. In 2008, when the county took out a different bond, rating agencies gave Walker County a triple-A rating, meaning creditors could feel safe investing in the county.

In 2014, Moody's dropped Walker County to a double-A rating and gave Heiskell's operation a negative outlook. In part, the agency was uncomfortable with the county's low level of cash on hand.

Heiskell said the reserve fund has not improved since then.

"I'm operating on no money," she said, "just in case you think I'm wasting it."

Contact staff writer Tyler Jett at tjett@timesfreepress.com or 423-757-6476.