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Hamblen County Mayor Bill Brittain, presented the General Debt Service Fund to the county commission’s finance committee discussed at its meeting Tuesday.

Brittain began discussing several bonds and debt that will be paid off in the coming years.

“The Series E4A bond which dates back to 2000 will be paid off in 2025 and the qualified school bonds which funded the expansion of East High School in 2009 will be paid off in 2026,” he said. “So those are two pieces of debt that will be paid off soon.

“Under bonds payable you will see Series 2014, which is the next group of debt pieces. $5.2 million dollars was issued and that was issued partly for roads and partly for schools and that will be paid off this year.

“Because of paying off these pieces of debt we were able to structure our debt for the justice center, the new Lincoln Heights Elementary School and the expansions of West High School.”

Brittain then showed the committee the big picture of what the county’s debt looks like compared to its revenue.

“You will see in the next three years we will be spending fund balance for the debt fund balance which was part of the plan,” he said. “We won’t be spending as much as the original plan because of the increase in revenue in property taxes and interest income.”

As of June 30, 2023, the end of the fiscal year, the county’s debt is $129 million.

“That is all the debt that has been issued for the West High School Expansion, new Lincoln Heights Elementary School, the justice center project and the landfill expansion.

“Our bond rating still remains strong,” he said. “For a community our size our financial position is still strong and that is reflected in the financial markets.”

Brittain then discussed the revenue coming in for debt services which is more than expected.

“We’re estimating and budgeting a little over $6.9 million in current year property tax,” he said. “That’s 43 cents on the tax rate and that’s the current rate we have for debt services. We estimated that will be an additional $50,000 compared to the 2022-2023 budget.

“We are estimating $94,000 from Circuit/Clerk and Master Prior Years collections,” he said. “That is where the property owners’ taxes have been turned over to the court and are sued for their taxes.”

However, the property tax isn’t the only surplus. The interest income is also more than expected.

“That is our interest income and this is interest earned by the trustee’s office off the balance that is in the debt service fund,” he said. “We are estimating that this year we will collect $1.3 million in interest where we have just budgeted $260,000.”

“Interest rates have gone up this year and that has benefited us in this year. We will have a full year of high rates and we are estimating we will have $1.3 million in interest.”

Commissioner Peggy Howell questioned if that money would go to pay for the justice center project.

Brittain clarified that the interest that comes from the debt service balance (the $1.3 million) goes to the payments for the county’s debt. The interest from the bond issue for the justice center project goes directly to the jail project.

Brittain proposed, with the anticipated interest exceeding the county’s expectation, to move money that was planned for debt services to the Highway department to help with roads.

“For the past several years we have budgeted $63,000 in sales tax for debt services,” he said. “But since our interest income has grown so much we are proposing we move that $63,000 to the highway fund.”

He then discussed more bonds that will be paid off this year to alleviate financial burden on the county.

“For Highway and Streets’ Principal on Bonds in the 2023—2024 proposed budget that is at a zero because we will be paying that bond off,” he said. “We are actually making the last payment this week so that bond will be paid off.”

As he closed the debt service portion of the meeting Brittain discussed the shortfall in revenue and how the county will use fund balance to cover it.

“For Debt Services the proposed budget for 2023-2024 the total expenses of $10,276,564 which we estimate will be $492 thousand more than the revenue we bring in,” he said. “Just a reminder that throughout this budget we estimate low on income so I would not be surprised if we don’t finish the year in the black based on that.

“This budget document calls for $492,000 from fund balance for our debt service and that’s part of the plan.”