Walker County commissioner foresees property tax hike after audit shows $70 million debt

Walker County commissioner foresees property tax hike after audit shows $70 million debt

July 22nd, 2017 by Tyler Jett in Local Regional News

Walker County Commissioner Shannon Whitfield speaks during his first State of the County address at the Walker County Civic Center on Tuesday, April 25, 2017.

Photo by Dan Henry /Times Free Press.

Walker County, Ga., Commissioner Shannon Whitfield said "it appears" property taxes will be going up this year.

By how much? To be determined. Whitfield will meet with the board of assessors next week to see how total property values are going to change this year. He will then determine a millage rate increase.

"We may be pushed against the wall and have no other option," he said.

Whitfield's announcement comes a day after he received his first county audit, which documented finances through Sept. 30 of last year. The first page of the audit shows the county's total debt: $69.9 million. For context, the county brought in about $27 million in total revenue last year.

Last year, Whitfield and former Commissioner Bebe Heiskell argued about how deep of a hole the local government was actually in. Heiskell, who had been in office since 2001, said the county was realistically in about $12.1 million of debt. She discounted bond payments that are supposed to be covered by future sales tax revenues, as well as a couple of debts she had paid.

But Whitfield said the sales tax revenue bond could not be discounted: It was a debt Heiskell chose to take on, with interest. He also added a $15 million bond that Heiskell did not include in her math, as well one of the county's biggest political points of contention: An $8.7 million debt to Erlanger Health System.

During the campaign, Whitfield estimated the total debt to be at $84.3 million. He overshot by about 20 percent. But part of the discrepancy is the result of how money is accounted for. He said Heiskell took $9 million budgeted for roads and diverted it to the county's industrial park development.

That isn't actually a debt. But Whitfield said otherwise: Those roads still need to be paved, and the county needs another $9 million to do the job.

"My mandate has been to come in, turn the Titanic around that is taking on water," said Whitfield, who took office Jan. 1 after defeating Heiskell in the November election.

Erlanger debt

Last week, the U.S. Court of Appeals ruled that Walker County does, in fact, owe Erlanger Health System $8.7 million. The debt stems from a 2011 agreement, in which Heiskell guaranteed up to $10 million as a part of a loan from Erlanger to Hutcheson Medical Center.

Heiskell signed a contract with Hutcheson's board. If the hospital could not pay its loan back to Erlanger, the county would step in. But what followed was a bit confusing. Hutcheson filed for bankruptcy, then was purchased.

An attorney for Walker County, meanwhile, argued that the local government didn't have to pay Erlanger. Heiskell signed an intergovernmental agreement, which is only applicable to entities in Georgia. Plus, the attorney argued, you can't sue a county in Georgia because of a sovereign immunity clause in the constitution.

A U.S. District Court judge rejected those arguments last year, demanding that Walker County pay Erlanger. The county then tried its luck with the Court of Appeals. But justices there rebuffed the county, too.

Whitfield said Friday he has not decided what he will do about the payment. He met with lawyers this week and will make a decision next month. Among his options, he said he could petition for a case in front of the U.S. Supreme Court or ask for an expanded hearing, with more than three justices at the U.S. Court of Appeals listening to the county's arguments.

Pension liabilities

The audit shows that the county's pension plan is underfunded by about $3.8 million. This is about an 18 percent increase from the year before. Whitfield believes a driving factor for the increase was a buyout last year.

Heiskell offered employees a bonus to withdraw their pension funds last year. The bonuses depended on how long employees worked for the county and what their annual salaries were. But overall, 15 employees took early retirement and received a combined $770,000 in extra money.

"There was no guarantee of a future for me at the county under the new administration," former County Coordinator David Ashburn told the Times Free Press of his decision in February, a month after Whitfield fired him. "And lo and behold, I'm not there. It seems like a good move."

In addition to the bonuses, the buyout removed the investments of several employees out of the fund. Whitfield said this will create long-term problems.

"Financially," he said, "we are upside-down."

Contact staff writer Tyler Jett at 423-757-6476 or tjett@timesfreepress.com. Follow him on Twitter @LetsJett.