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Walker County Commissioner Bebe Heiskell speaks to hospital employees in the lobby of Hutcheson Medical Center in this Oct. 14, 2014, file photo.

Staring at tens of millions of dollars of debt, Bebe Heiskell is looking to the state Capitol for a solution.

Heiskell, the sole commissioner of Walker County, has been working with state Rep. Steve Tarvin, R-Chickamauga, to craft a bill that would let the county government create a new Public Facilities Authority.

If the Legislature approves the plan, Heiskell's new arm of local government could issue revenue bonds -- without voter approval -- to pay money the county owes for backing Hutcheson Medical Center.

Some of the debt is past due, and creditors are knocking on Walker County's doors. But this maneuver could buy the county more time. Critics believe it could also force taxpayers to toss more money down a bottomless pit.

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Steve Tarvin

Tarvin said Friday night that he is still working with legislative counsel to write the bill. He expects to file it this week.

Walker County owes millions of dollars because of loans that Hutcheson received. First, in 2011, Erlanger Health System extended a $20 million line of credit to the North Georgia hospital. Two years later, Regions Bank loaned Hutcheson about $7 million so the hospital could make payroll.

Elected officials in Catoosa and Walker counties each promised to pay about half the loan if Hutcheson couldn't. Now the Regions loan is due, and Hutcheson doesn't have the cash to meet its obligations.

The Catoosa County Commission voted in January to pay its part of the Regions loan: $3.5 million. But Walker County still has not paid its share, which comes out to about $4.5 million.

According to the contract both counties signed with Regions at the time of the loan, Walker County is also on the hook for a 5 percent penalty for not paying the money on time. This could come out to an extra $225,000, though Heiskell said the bank is not going to impose the penalty.

Regardless, the Regions debt could be devastating to a county with a budget of $22 million -- and that doesn't even include the potential $10 million-plus debt to Erlanger. That obligation is on hold because the two hospitals sued each other and are tied up in U.S. District Court.

Concerning the Regions debt, Heiskell said she can't raise the necessary money through a tax increase, especially after raising property taxes by about 18 percent last year.

"I don't want to have to do that again," she said Friday night.

So she wants the legislature to create the Public Facilities Authority, a branch of local government that other municipalities like Bainbridge and Peachtree City have added in recent years. This authority would have the ability to issue revenue bonds.

Heiskell said Walker County could do that on its own. But according to Georgia law, local voters would have to approve the debt through a referendum. Creating an authority would allow the county to get the money more quickly, she said. Also: Without oversight.

Those bonds can be paid off in small increments over the course of several years. In other words, the county needs to find $4.5 million as quickly as possible, and this will get them the cash that keeps creditors at bay. The lenders will demand this new $4.5 million back, plus interest, but that's far down the line.

If this happens, who will have to pay the money back? It's hard to say until the bill is written. But revenue bonds are tied to a specific entity, which is responsible for repaying the loan. In this case, that would seem to be Hutcheson.

Problem is, creditors are already lined up outside the hospital with their hands out, waiting to get their own loans back.

Hutcheson filed for bankruptcy in November, and according to court documents filed on Dec. 15, the hospital holds $32 million in assets against $82 million in liabilities. According to a financial report for December, also filed in Bankruptcy Court, the hospital spent $100,000 more than it made that month.

Dean Kelly, chairman of the Walker County Republican Party and coordinator for the Northwest Georgia Tea Party, believes this financial maneuver would still ultimately fall back on county taxpayers. He doesn't think the hospital can pay the money back.

"Bebe is kicking the can down the road so it doesn't affect her in the next election," he said. "That's what politicians do."

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

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