When the county begins the annual budget process this year, it will be operating under a newly adopted policy requiring the commissioners to adopt a balanced budget.

In a split vote of 16-6, members of the Carter County Commission voted to adopt a resolution setting a balanced budget policy for the county and establishing a special capital projects reserve fund using unused funds returned to the county by the various departments and offices at the end of each fiscal year. Because the resolution would change the Commission’s operating bylaws, a two-thirds majority was needed to adopt the new policy, with 16 being the minimum number of votes needed for the resolution to pass the governing body.

Under the terms of the proposed resolution, “it shall be the policy of Carter County to develop a ‘balanced budget’ each and every fiscal year, which shall take into account the budgetary needs of each office, department and/or division of Carter County government and fund those budgetary needs only through utilization of existing and/or projected revenues.”

The second part of the resolution would set up a capital project reserve fund. At the end of each fiscal year, the county’s various departments and offices return unused funds from their budget to the county. Those monies are then placed into the county’s fund balance reserve. Under the proposed resolution, 50 percent of those returned monies would be set aside in a special fund to pay for capital projects.

The resolution was forwarded to the full Commission for adoption by members of the county’s Financial Management Committee following a unanimous vote of support by that committee. Members of the county’s Budget Committee also showed their support for the proposal with their own unanimous vote of approval.

During Tuesday’s full Commission meeting, Financial Management Committee Chairman Commissioner Danny Ward presented the resolution to the group and made a motion to adopt the new policy. Commissioner Mike Hill provided the second for the motion.

During the discussion on the resolution, Commissioner Ray Lyons said he had previously proposed the idea of a balanced budget to the Budget Committee but, under his proposal, some of the unused returning funds would have been set aside not for capital projects but to create a designated pool of money to fund employee raises.

“You can build a big, fine building but if you don’t take care of the employees inside that building you are making a mistake,” Lyons said, adding he felt the 1 percent raise given to county employees last year was “a slap in the face” to those individuals.

Carter County Finance Director Christa Byrd said while she supports giving raises to employees she thinks those funds should come from budgeted revenue and not reserve funds, which are not recurring.

“If you give a 3 percent raise, once these funds are exhausted you are still obligated to that, and you’ll have to come up with money in our regular budget to fund that,” Byrd explained. Because employee salaries are recurring expenses rather than a one-time expense, they should be funded from recurring revenue according to Byrd.

Commissioner Brad Johnson, who presented the balanced budget and capital project fund proposal to the Financial Management Committee, also discussed the funding of raises. During last year’s budget process, the county awarded a raise to county employees by taking the money out of the county’s reserve fund balance. Now, Johnson said, the county will begin this year’s budget process “in the hole” as they try to secure revenue to fund those raises given last year. “Don’t take labor out of your fund balance,” Johnson said.

Johnson also pointed to other items which the county funded in the 2017-18 fiscal year budget by tapping into reserve funds instead of budgeting to received revenues.

For the 2017-18 fiscal year budget, the Commission approved a property tax increase of 2 cents and also directed the county to recognize $160,000 the county expects to receive in interest on CDs invested through the County Trustee’s Office. Even with those revenue increases, the budget remained unbalanced, and an estimated $443,000 had to be pulled from the fund balance just to cover the budgeted expenditures.

“You are in the hole right now, before you go into your first budget hearing, a total of more than $400,000,” Johnson said.

Other members of the Commission shared Johnson’s concern.

“People, when you keep going to the well it’s going to run dry, and it’s going to come back on the taxpayers,” Commissioner Ronnie Trivette said.

Ultimately, the Commission voted 16-6 to adopt the resolution establishing a balanced budget policy and special capital projects reserve fund.

Commissioners Dr. Robert Acuff, Mike Hill, Al Meehan, Bradley Johnson, Charles VonCannon, Isaiah Grindstaff, L.C. Tester, Danny Ward, Bobbie Gouge-Dietz, Timothy Holdren, Randall Jenkins, John Lewis, Sonja Culler, Scott Simerly, Robert Carroll, and Cody McQueen voted in favor of the resolution. Commissioners Willie Campbell, Buford Peters, Ronnie Trivet, Ross Garland, Larry “Doc” Miller, and Ray Lyons voted against the policy changes. Commissioners Nancy Brown and Kelly Collins were absent from the meeting.