County turns to bank loan for cash
A local county that is low on cash is taking a loan from the bank and the chair of the budget committee says that’s not uncommon.
"It's just like your checking account. You need the cash-flow," said Commissioner Eddie Williams.
The county took a $2 million loan from the Bank of Tennessee at an interest rate of 0.73 percent. "The interest rates are very low right now and it's very in-expensive if you have to do that,” he said.
Williams said the tax anticipation note will keep the county in the black until residents start paying their property taxes in the next couple months. "It’s a loan that enables us to have the necessary cash-flow to pay whatever comes due in the general fund of the county until the taxes come in,” he said.
Williams explained that the loan is needed after years of taking money from the reserves, like the county’s savings account, and putting it into the general fund, the checking account, because of a bad economy and the recession. "We did it to try to save tax increases at that time and not place the burden on anyone we wouldn't have to."
According to Williams, after about four years, the reserves went from about $12 million to $5 million, which is why the county had to raise property taxes 20 cents in July to put more money back into the reserves.
However, some Sullivan County residents believe the government shouldn’t be borrowing money to pay its bills. "A balance budget means you should be able to take the money you've got coming in and be able to spend it out evenly for the stuff you have to have,” said Logan Mann.
But Williams said this isn’t the first time Sullivan County has borrowed money. "We did it last year for schools, the year before that, and we're doing it this year,” he said. “It's not an uncommon thing at all.”
Property tax money should start coming into the county in December and is due by February. The loan must be paid back by the end of the fiscal year which is June 30, but Williams expects it to be paid shortly after property taxes are due.
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