Bebe Heiskell Says She Has Not Decided On Tax Increase; Oliver Says Long-Term Debt May Be Needed To Cover $10 Million Hospital Pledge

Thursday, August 6, 2015
Walker County Commissioner Bebe Heiskell said it is premature to discuss a possible tax increase.
 
She said she had not decided on an amount if one is necessary.
 
At the same time, County Attorney Don Oliver issued a statement saying that Walker County may soon need to take out long-term debt to cover a $10 million pledge of credit to the financially-ailing Hutcheson Medical Center.
 
He said it would be needed to replace the current short-term note.
 
County Attorney Oliver said, "The county had to borrow short-term money earlier in the year in order to honor its guarantee of Hospital debt, which obligation was suddenly thrown upon the county because of adverse rulings in the federal court case with Erlanger.  That short-term debt was the only option available on such an emergency basis, with the county's yearly budget already set.  This short-term note, by law, has to be paid in total by 12/31.  To pay it all at once would require a huge one-time tax increase.  Of course, Commissioner Heiskell does not want to put that huge one-time burden on the citizens. 
 
"From the day the county took out the short-term note to pay the hospital debt, Commissioner Heiskell said if the hospital could not repay the debt by budget setting time, she would try to roll that short-term debt into a longer-term note, the payments on which the county could either absorb into the yearly budgets, given sufficient economic growth, or pay each year with a one-time very small tax increase that would be carried forward each year for the term of the note, if needed.  It is time to set the budget and levy next year's taxes. 
 
"The county continues to work on all possible options.  Every bank, of course, wants loan security, and that security is the pledge of the additional county tax, if needed.  The county can only pledge any tax beyond 12/31 of any current year through an Inter-Governmental Agreement (IGA) with an Authority where legislation has authorized such a pledge.  The Hospital Authorities Law allows such a pledge via an IGA between the county and the Hospital. 
 
"The Hospital Authority voted to agree to enter such an IGA with the county so the county could in turn pay the Hospital's debt guarantee via those pledged taxes if the county needed such a pledge for security in order to roll this short term note into a more manageable long term note.  The vote was merely an agreement to agree on such an IGA, if needed.  If the IGA is ever done, it poses no new debt obligations on the Authority or county, but merely allows the county to convert the already existing short-term emergency debt into a more manageable long-term note that or county, but merely allows the county to convert the already existing short-term emergency debt into a more manageable long-term note that is better for the citizens.  If the IGA is done, the Authority will owe nothing it does not already owe.
 
"The analogy is rolling a temporary 120-day home construction loan into a longer-term mortgage so the payments will be manageable."
 

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