March 10, 2006 The county is "broke" and leads the state in audit problems

Before I move on to the 2004 audit, I want to make one additional post about the 2003 audit on items that I have touched on in previous posts but which bear repeating.

1. The 2003 audit of Hamblen County government showed 29 findings (irregularities, violations of state law, accounting and purchasing problems). Hamblen County had more audit findings than any other county in the entire state and that includes the big four of Hamilton, Davidson, Knox, and Shelby.

2. Hamblen County government's general fund (the county's checking account) was broke at the end of the 2003 audit year and only a shifting of funds from several other funds into the general fund gave Hamblen County enough money to pay its general government bills.

Mismanagement and budgeting and purchasing deficiencies had plagued the county for years. The only difference in 2003 was that there were new auditors who finally pointed out what had been going on.

2003 was the big KA-BOOM year. Some of the bitterness and red-faced rants that some officials still resort to when I ask financial questions can be traced to the fact that I was the one who made the initial proposal to have the state auditors come in.

The mismanagement of public money, conflicts of interest, ethical shortcomings, and insider deals that are rampant in local politics (and in state and national politics, too) have naturally, and unfortunately, led to the overall lack of trust in public officials.

Nowhere is the motto "trust, but verify" more necessary (and more resisted) than in government.

A lot of people who have watched government in action have said that if they managed their family finances like the government does, they'd be broke. The 2003 county budget process is a fine example of this. The 2003 budget, like so many before it, was a hurry-up and pass something budget. Let's throw something together before anyone comes in asking questions.

That hurry-up process with its last-minute tax increase and last-minute vote on a 2003 budget turned out to be a disaster for county taxpayers.

First, the old (2002) commission raised property taxes at the last-minute--- even though the chairman of the commission Maudie Briggs had told voters months earlier that if they would just vote to extend the wheel tax (in the famous "pick-your-poison" wheel tax referendum) then there wouldn't be a property tax increase.

Then the old commission voted for a budget or spending plan that left off lots of the spending--kind of like a family that "forgets" to include the car payment in preparing their family budget.

2003: Despite taking in more money due to the property tax increase and extension of the wheel tax, the county AGAIN spent more than it took in. In fact, it spent so much more than it took in during 2003 that the tiny savings that the county had from 2002 (fund balance) was wiped out and the county had to go take money from other funds to shore up the general fund that was broke.

Were any other funds "broke" in 2003? Yes. The hurry-up, pass it, don't ask questions process also ended up with the county garbage fund going broke in 2003, too.

How did the county pay its bills? The new state auditors had the county dumping money from several other funds--like the DUI control fund, the Rural Services Fund, the Volunteer Fire Department Fund, etc.-- into the county government fund to help keep Hamblen County government afloat.

Sadly, overspending in 2003 was nothing new for Hamblen County government. Overspending has been a serious problem in Hamblen County government for years and years. Looking back at the 12 fiscal years (1992-2003), the county spent more than it took in during 8 of those 12 years. Not a good track record.

Of course, the official reaction is always that there's a shortage of money. So was the county suffering from some kind of revenue (money) shortage during these years? No. Revenues were increasing but expenditures were increasing even more rapidly. There's your problem.

In 2002 the county spent $923,000 more than it took in, and in 2003 the county increased taxes and still spent more than it took in. With the June 30, 2003 audit report, the bubble burst. Hamblen County was broke and Hamblen County had more financial audit findings of irregularities than any other county in the state.

To paraphrase one commissioner, "we've been robbing Peter to pay Paul and now Peter has left town." Actually, we had robbed Peter so much through the years that Peter was broke, just like Paul.

Peter left town all right---penniless.