On Debt and Taxes

An Opinion by Charlie Paris:Gilmer County is absolutely buried in debt; and we will be for the next 20 years. We all know it, although we sometimes wonder how we could have allowed it to happen. We did allow $30 Million of it, by approving the General Obligation Bonds at the polls. That’s on us. We were never given an opportunity to vote on the $26,890,000 of Revenue Bonds issued by the Gilmer County Building Authority. This means that we have gone into debt to the tune of $56,890,000 but, similar to a long term mortgage, by the time we pay it off we will have paid closer to $100 Million. Our estimated yearly payment is $4.2 Million.

I’ve heard some folks say that we should just default on the bonds – declare bankruptcy. That’s not possible, because when issuing the GO Bonds – and when entering into a lease agreement with the Gilmer County Building Authority to guarantee payment of the Revenue Bonds – our County Government pledged the full faith and credit and taxing power of Gilmer County to the repayment of the bond debt.

Full faith and credit and taxing power; what does that really mean? First, it means that there will be no default. If we should fail to pay the debt service, the state would appoint an administrator to seize the first $4.2 Million of property taxes every year to pay for the bond debt. Whatever is left, the County could use to pay our County expenses. Essentially, that is no different than our current situation, except that now we govern ourselves without interference from the State.

So……….what’s the solution? Our current solution is a Special Purpose Local Option Sales Tax (SPLOST), with the proceeds used to pay the debt service on the bonds, along with some other specified projects. That SPLOST will be expiring next year, and we are going to be asked to approve a new SPLOST. I hate SPLOST. I’d much rather just not spend the money and not have the extra tax, but it isn’t that simple for us. In our case, the money has already been spent – for the next 20 years. Now we just have to pay for it. With that in mind, a SPLOST makes a lot of sense. It allows for our visitors to help pay down the debt, each time they make a purchase here, and relieves some of the burden from our property taxes. One problem with this is that the current SPLOST is worded in such a way that our BOC can use it for any number of projects in addition to the debt service on the bonds. There’s nothing wrong with this, as long as the debt service has priority – but there’s the rub. It doesn’t.

In the past, other purchases were made with the SPLOST money before applying what was left to the debt service. What was left didn’t cover all of the required payment, leaving us about $1 Million short of the funds needed. This was addressed with a special 1 Mil addition to our property taxes, specified as being specifically for the bond obligations. There’s nothing illegal about this; probably even nothing unethical about it – except for trying to deceive us into believing that all of the SPLOST funds were used for the bond payments, when in fact that was not the case.

A number of us have asked our Commissioners to modify the wording of the current SPLOST resolution, to specify that the proceeds must first be used to pay the bond debt, and then anything left over may be used for the other projects mentioned in the resolution. They do not want to do this.

I don’t believe the citizens of this County will approve a SPLOST that has no guarantees on how much will be used to pay down our debt. I suppose it’s a matter of trust. I don’t have it.

If you are ok with passing a SPLOST without restrictions on priority, then all you have to do is show up at the polls in November and vote. If not, you need to contact our Commissioners and let them know that you expect the language to be changed to provide first priority to the bond debt servicing. Time is short, because once the resolution is approved and sent to the Probate Judge to place on the ballot, it will be too late.

You may contact our Commissioners as follows: JC Sanford (jcsanford@gilmercounty-ga.gov 706-635-4361), Danny Hall (dhall@gilmercounty-ga.gov 706-889-7777), Randy Bell (randyb@ellijay.com)

Remember, we can’t do anything about the debt that has been given us, but we can certainly insist that it is paid back in the most painless way possible.