WHERE THEY STAND: Franklin candidates discuss managing debt

Published 12:00 am Wednesday, April 30, 2008

This is the third installment in a question-and-answer series with candidates for the Franklin City Council.

What will be your decision-making approach to capital projects that require the city to borrow money?

Ward 2

Benny Burgess

In light of the city’s current debt, we need to fully examine each project, first making sure it is in the best interest of the city and that the citizens are behind it. To do so is tricky because each project will have its own merit and supporters. It is incumbent upon the City Council to create a matrix to measure and determine priorities — a litmus test for all projects. Once we’ve determined the project is necessary and acceptable to citizens, creative financing is a must. We need to explore all alternatives, including regional opportunities, grants and use taxes. Additionally, if we control spending and operate efficiently, we may find that less financing of projects is required. Debt management is about managing cash flow.

Charles Wrenn

Capital funding has a hierarchy of importance, as follows:

1. Mandated work that must be done: environmental, safety, some school projects, law enforcement. These projects must be done, usually cannot be put off, and the money must be found, sometimes to the detriment of other projects with a lower priority.

2. Not mandated, but essential to providing basic services: Provide and maintain water services and towers, sewage plant, wells, public buildings, streets, electrical services, transportation for police, fire and rescue, garbage trucks, school upkeep, etc. These projects will usually be done, but might suffer substantial delay. These projects will depend on how well we can “get by without,” or how important they are to the citizens.

3. Necessary to promote industrial and commercial growth: industrial parks, concessions to potential businesses and industry, i.e., utilities, infrastructure, etc. These projects are slow coming unless we have a firm commitment for a business to locate in Franklin. They may be delayed indefinitely.

4. Contributes to quality of life: road improvements, recreation improvements, cemetery expansion, train depot, farmers’ market, etc. These projects have the lowest priority. However, they may have the most demand from our citizens.

Careful consideration must be given to the following: Is it really necessary? Can we afford it? How will the debt service be handled? Are our citizens willing to pay for it? What future mandated or essential projects may be on the radar?

The first step for a potential capital job is to determine where it fits on the hierarchy, what it will cost, and whether it is affordable. Then take the approach suggested by the hierarchy.

Regardless of hierarchy, all projects must be carefully scrutinized to determine their necessity and value to our city.

Mayoral candidates

Jim Councill

As of now there are no capital projects anticipated that will require borrowing and repayment by the general fund. The only capital projects anticipated requiring borrowing are in the Electric Department, adding a generator for peak sharing, rewiring a substation and putting in a new substation. That borrowing will be paid out of the electric fund revenues.

Should other capital projects emerge they will be scrutinized for their value, need and cost-effectiveness. Nothing is built with borrowing and general fund revenue without thorough, cautious and judicious study and evaluation. Our primary objective is to continue our debt-reduction schedule and building our operations reserve. If something substantial comes up there will be ample publicity and public-comment time to share information and receive public input.

Our current capital debt consists of flood recovery, school-facility debt, and water, sewer, and electric upgrades to provide adequate services to our citizens.

Our financial plan is reviewed and updated annually by our financial advisers at Davenport & Co. Our general fund debt is 2.2 percent of our real property values, and overall debt counting enterprise funds is 3.3 percent, well below the maximum 10 percent and the targeted 5 percent.

Ellis Crum

There are many things that go into making this decision. The city currently has a Capital Improvement Plan, or CIP, budget. Some of the things are “want to have,” while others are “must have” projects.

Some are for public safety, while others are for aesthetics. Some create large expenses that reoccur annually, while others have a payback, reduce expenses, and increase our efficiency, safety and reliability. The City Council has overcommitted the CIP resources, minimized our reserves and left us a large debt service. We must not sacrifice our future for the pleasure of now.

The city needs a business-like approach that ensures adequate reserves that will offset borrowing and maintain our cash flow. We MUST prioritize each of the CIP projects and complete only the ones that are necessary. We will be careful not to create more unnecessary ones long term. As mayor, I will ensure that citizen input is invited, encouraged and incorporated into the CIP. We must also look at integrated resource planning, which looks at several different plans and selects the most cost-effective one.

Greg McLemore

My first reaction to the question of more borrowing is unequivocally: “NO more; we’re already in deep enough debt.” However, with consideration of the issue and depending on the benefit to the health and welfare of the entire citizenry, I could consider the proposition. There is profound waste and abuse of the tax payers’ money by this administration. The city is in the midst of a failure in vision, long-term planning and accountability. Before we consider borrowing more money, we should take a hard look at divesture of assets in order to reduce our debt load.

I would have the Planning Commission do a benefit analysis of the possibility of selling Pretlow Park to a private developer. The problem is that we have no long-range planning and process, which is due to a failure in leadership by the current mayor and city management and can be remedied by my skill set and creative citizen input. I would consider borrowing for flood-prevention methods and correcting the filtering system of our city water supply.

Ward 1

Barry Cheatham

The best alternative is to project capital projects in the future and reserve monies toward those projects. No matter what the proposed manner of financing is, I believe the City Council must first decide if the proposed project is a necessity for the well-being of the city and its citizens and then disclose to those citizens that such an expenditure is being explored.

Next, does the project meet or exceed the needs now and projected in the future? What other alternatives, if any, are available to the project? Once all of this has been determined, the council then needs to look into all potential financing alternatives and decide which would be better suited to the city and its current budget. I do not believe in borrowing money and then increasing taxes or rates to cover it.

Finally, the citizens should be able to respond to the project throughout the investigation and decision-making process. This is the type of responsible and transparent city government that we all deserve in Franklin.

Dan Hoctor

When reading the proposed budget’s preamble, it states the city does not have sufficient “Reserve Funds” in the general fund to fund capital projects out of normal tax revenue. This means that we have to be prudent in our decisions if the need arises to provide capital improvements with city funds. I don’t believe at this time it is necessary to discuss any capital improvements for the short term unless it is an emergency situation. We need to continue to pay off the debt as scheduled by the current city budget. The only known capital improvements I am aware of within the proposed budget involve the Electric Department, which are planned to help save money (new generator) and help the city’s service run more efficiently. I am a big supporter of a new high school for our public school system; this is something that needs to be looked into to determine our ability to accomplish this goal sooner. I will not support frivolous spending of capital projects within the city when money could be saved for future school support.