Walker County grasps for 7-figure answer

Walker County grasps for 7-figure answer

March 13th, 2015 by Tyler Jett in Local Regional News

Steve Tarvin

Steve Tarvin

Photo by John Rawlston /Times Free Press.

With a deadline to pay millions of dollars looming, Walker County missed a chance to buy more time.

State Rep. Steve Tarvin, R-Chickamauga, announced Thursday he won't introduce a bill in the Georgia Legislature to create a new arm of county government. If passed, the bill would have let local officials issue bonds without voter approval, turning short-term debt into long-term debt.

Tarvin needed to file the bill by today.

So what does Walker County do now? Commissioner Bebe Heiskell proposed a solution.

"If I win the lottery," she said, "I will share it with the taxpayers of Walker County. But I don't think I'll win. I'm not that lucky."

The bill would have created the Walker County Public Facilities Authority, something Heiskell wanted because she will have to pay about $4.7 million to creditors at the end of the year. That represents one out of every $4 the county collects in taxes.

The authority would have been able to issue revenue bonds without voter approval. The county would repay the money, plus interest, over several years. Maybe even decades.

Tarvin liked the idea. And he went out of his way five times during an interview Thursday to say he trusted Heiskell. But he didn't trust the idea of an authority.

Under Georgia law, local governments can issue bonds if voters approve them by referendum. The authority would have been a way to get around that law.

After paying off this current debt, Tarvin wondered, what's next? The authority would consist of appointed, not elected, board members. Would they issue more bonds, unnecessary bonds? Would the county crawl into a deeper hole?

"I made a pledge with myself that I would not do anything to put our citizens in more debt," Tarvin said.

Walker County is in this situation because it guaranteed loans to Hutcheson Medical Center in 2011 and 2013, when the Fort Oglethorpe hospital couldn't make payroll. Heiskell said hospital authorities promised her at the time they would be good for the money.

That promise fell through as Hutcheson filed for bankruptcy in November 2014. As of December, the hospital held $30 million in assets against $80 million in liabilities. U.S. Bankruptcy Court filings show it lost about $100,000 in December and another $200,000 in January.

“"I made a pledge with myself that I would not do anything to put our citizens in more debt."”
Rep. Steve Tarvin

All of this put a flashing arrow above Heiskell's office, telling creditors where the line begins. Walker County may have to pay back $10 million to Erlanger Health System one day, though that won't happen until the two hospitals finish suing each other in U.S. District Court.

But the county was still on the hook this year for $4.5 million it guaranteed in 2013 to Regions Bank and Erlanger as part of a separate loan. That's why Heiskell approached Tarvin.

Two weeks ago, Tarvin published an ad in the Walker County Messenger saying that he would introduce the bill. Even then, he said, he was wary about creating an authority. He advertised it because he had to give public notice in case he changed his mind.

He told Heiskell she could still hold a special election and try to convince voters that they need to issue bonds. She said Thursday she doesn't think the people will go for it.

So on Tuesday, alerted that Tarvin had decided not to introduce the bill, Heiskell took out a new loan to pay off the county's old loan. This one comes in the form of a tax anticipation note. She borrowed $4.5 million, though she has the ability to borrow another $5.5 million by the end of the year. And she has to pay the new loan back by Dec. 31.

The interest is 4.5 percent, or $200,000, if Heiskell doesn't borrow any more money and repays the loan by deadline. If the payment is late, the interest jumps to 6.5 percent.

Heiskell still needs to raise money. She might sell assets, though she said she doesn't want to provide details at this time.

She's also said she doesn't want to raise property taxes after boosting them last year by 64 percent. A tax increase is her "last resort." She won't decide whether to do that until this summer.

"I'll know by then what I can and what I can't do," she said Thursday. "I'm almost certain [I won't raise taxes]. I'm just playing life by ear and doing the best I can."

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


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