Bill to end financial strain for county in school bonding withdrawn


By Collin Brooks

An important House Bill that would have given Washington County the option to pay payments to Johnson City in-lieu of a lump sum payment when borrowing for education projects was withdrawn on April 17 by its House sponsor Representative Art Swann.

The fact the House Bill 0582 ran into any opposition surprised Washington County Mayor Dan Eldridge and Johnson City City Manager Pete Peterson. The backlash from Blount County was also surprising to Rep. Swann, who represents that part of the state.

“It got into quite a debate about what exactly the bill did,” said Swann during a phone interview. “And I wasn’t going to get between my cities and my county over the battle. When I took the bill, there was an indication to me that there would be no problem from the county — coming from my city people — and it’s my fault for not going to the county at that time and asking them to look at it.”

Without the bill, Washington County won’t be able to take advantage of the benefits an inter-local agreement between cities and counties would provide. In the near future, it means that the money that the county will borrow for the Boones Creek K-8 school project this coming year is going to have to double — for the city to get their allotted share.

It also means that the county cannot take advantage of their preferred funding arrangement in the form of a USDA Rural Development Grant Loan. That would have allowed them to take advantage of the low interest rates that are provided with that funding approach.

“Those interest savings came through the fact that the loan could be structured as a construction/permanent financing,” Eldridge said. “Where we were able to draw down, over the next three years, the money as we needed it, rather than having to take all the money up front, as you do in traditional public bond offerings.”

Now, the county will have to bond the full sum of the projects price on the first day and start paying interest on it from there, instead of drawing the interest payments out over time.

Current statues do not allow inter-local agreements with the sharing of education funding, which forces counties to take on large lump sum debt at one time. The counties agreed to support the bill that would require the sharing of the one time money (Public Chapter 305/T.C.A. 49-3-314), in exchange for the city’s support of an inter-local agreement, that would take care of lump sum payments.

The Senate Bill (0689) is sponsored by Senator Ken Yager (Kingston) and was recommended for passage to the Senate Finance, Ways and Means Committee 8-0, on April 11.

Swann said that the county was very upset with him and he is worried that he will never be able to mend his relationship with them. But in conversations he admitted he could never quite see where their position was, saying Blount County representatives were, “convinced that it was to cause them, on their capital spending, that they would have to split those dollars. And they were just convinced that was going to be the case and they weren’t going to hear anything else,” Swann said.

Eldridge and Peterson said they were under the impression that Blount County just didn’t quite have an understanding of what the bill would mean.

“It got pushed up the ladder, to the point where they got their county attorney involved and their county attorney looked at the proposed legislation and misinterpreted it and gave them some really bad advice,” Eldridge said.

Peterson agreed that the county got the worst end of the deal with the bill being withdrawn for this session.

“The counties were probably the bigger loser in this, in that the ability to have those inter-local agreements was really advantageous to the counties,” Peterson said.

The Johnson City City Manager said that even though the bill was just withdrawn, there are people already at work trying to structure a bill that would be able to hit the house floor during next years legislative session.

“We are very supportive in getting a bill passed that would address both 305 and the inter-local agreement. It’s in the best interest of everybody involved,” Peterson said.

He also mentioned that a group called Coalition for Better for Schools, which brings everyone to the table to talk about education issues, not only from the perspective of those providing the education, but also from the perspective of those who are having to fund education and find out the best way to do things, are looking for the most cost effective ways and methods that produce the best results.

“Because at the end of the day, education is one of the most important things that local governments do,” Peterson said. “Because if you’re going to have good jobs, high-paying jobs, good quality of life, plenty of recreational opportunities, you’ve got to have a good educated work force to attract those jobs that are going to drive all of that.”


About Author

Comments are closed.