VOL. 132 | NO. 68 | Wednesday, April 5, 2017
Commission Debates Use of $20M Surplus
By Bill Dries
The Shelby County Commission delayed a vote Monday, April 3, on a $120 million refinancing of the county’s capital bond debt for two weeks.
Commissioners are specifically eyeing a $20 million surplus in the county’s debt service fund – the fund that pays down the county’s debt.
The administration of Shelby County Mayor Mark Luttrell wants to use the $20 million to repay debt and avoid issuing that much in bonds for the debt.
Budget committee chairman Steve Basar, however, argued for keeping the $20 million in a fund balance that totals $35 million to $40 million, by the estimate of county finance director Wanda Richards.
“If we give up $20 million in the debt service fund today, we may be needing additional tax revenue,” Basar said. “I would prefer to keep that $20 million flexible.”
Basar cited a projection of $70 million in capital spending the county is likely to have over the next five years – much of it in new school construction, a new Shelby County Health Department building and construction at Regional One Health.
County chief administrative officer Harvey Kennedy confirmed there are likely to be some “sizeable” capital projects in Luttrell’s upcoming budget proposal.
“I can see the logic for keeping flexibility,” he told Basar. “It’s a hard choice. But I just don’t think there will be that much bond indebtedness coming from the schools. I still think the use of the $20 million is appropriate at this time.”
Kennedy points to the long timeline to execute school projects, with phases across several fiscal years starting with design.
The Shelby County Schools system is expected to seek capital funding for the construction of two new schools in the 2016-2017 fiscal year that begins July 1 – new Goodlett and Alcy elementary schools to replace existing schools on both sites with larger ones that will allow the system to close several nearby schools. Further ahead are still tentative plans for a Woodstock K-12 school in north Shelby County.
The county has issued $80 million of the $120 million so far and plans to use another $20 million in short-term debt by the end of May, Richards said. That would be repaid with the fund balance to avoid using bonds. Otherwise, the county would issue $100 million – all in bonds – and keep the $20 million in fund balance.
Commissioner David Reaves said if the county is over-collecting on debt service the commission should consider shifting pennies on the county property tax rate that go to debt service and use the revenue to reduce the county property tax rate and put money toward SCS liability for Other Post Employment Benefits – or OPEB.
Both have been priorities for Reaves in past budget seasons.
In other action Monday, the commission approved a $364,224 technical assistance contract with GCR Inc. of New Orleans. The contract is part of three resiliency projects across Shelby County funded with a $60 million federal grant announced last year.
The commission also approved a resolution by commissioner Terry Roland urging the Tennessee Legislature to find $500,000 in state funding for a new boat ramp at Meeman-Shelby Forest State Park.
And the commission approved a three-year contract of $1.4 million a year with Aramark Correctional Services LLC for fiduciary services at the Shelby County Jail at 201 Poplar Ave. and Jail East at 6201 Haley Road.
Aramark will receive, store, release and account for all inmate property and money and process requests for the money and property from either the inmate, a court or those approved by the jails.