Steve Jennings has a vision for a day when Blount County government pays down its debt and raises money for capital projects without resorting to bonds.
Jennings, Blount County finance director, spoke to the Kiwanis Club of Maryville on Tuesday at the Green Meadow Country Club. He gave a perspective on the county’s financial situation, his thoughts on how it got where it is today and where he thinks it can be in the future.
Jennings, a Blount County native, graduated with an accounting degree from the University of Tennessee before he took a job with Alcoa, Inc. His career with the company took him throughout the country and around the world before he retired three years ago as chief financial officer of Primary Metals Group of Alcoa, Inc., in New York City.
Former County Mayor Jerry Cunningham hired Jennings in early 2010 to replace former finance director Dave Bennett when he became CEO of Cherokee Millwright.
Jennings said in business he worked for one CEO but in county government there are multiple CEOs, each an elected official. The former executive said leadership is simple, because it means having the ability to influence others and having the courage to go where it is necessary to go.
Jennings said the county has a $7 million deficit in the coming fiscal year. “Two years ago, we had a balanced budget, and four years ago, we had $6 million to $7 million in fund balance,” he said.
The finance director said declining sales tax revenues and rising costs on expenses such as health care and state retirement funds led to the deficits, but the county has done a good job in dealing with the shortfall. “Salaries have remained flat and operating expenses have gone down,” he said. “The county has done a good job of controlling what they can control.”
Jennings said the county also has $220 million in debt. “Based on my analysis, it is about $100 million more that we need,” he said. “We have way too much debt.”
The finance director said that in his view, the growing debt started 20 to 25 years ago when people started to move to Blount County, a beautiful county with a low cost of living. “People were pouring in. The last 10 years, Blount County has grown by 16 percent,” he said.
In the 1960s, ‘70s and ‘80s, not much changed as far as the infrastructure of the county. Then, during the late 1990s, the school department implemented a building plan, the new Justice Center was built, the courthouse was renovated, and the library was built. The capital cost, along with the expense of adding “split-dollar” funds to bonds to give to the municipalities because their residents also paid county taxes, meant the bill grew to $220 million, he said.
“There were never long-term plans to say what our needs are and how we were going to pay for it,” he said.
Jennings said the leadership opted not to plan long-term regarding how to best pay for the projects and created bond situations in which the principle of the bonds was “backloaded,” meaning it wasn’t meant to be paid until 2025. “The only reason you structure debt that way is to let the next generation pay for it,” he said.
Jennings said that in the short term, he expects that county elected officials will work with the commission to rectify the $7 million deficit through cost reductions and economic recovery.
The finance director said he hopes to see the debt reduced by $100 million in 10 years from 2013 to 2023.
Jennings said that when the economy improves, the commission should raise property taxes to a reasonable level to where a portion can be set aside for paying down the debt as well as to fund a capital projects fund.
“At some time in the future, we’ll need another high school in the county. When the growth rate returns, people will be pouring into Blount County,” he said. “I don’t want to borrow money to build it. We need to address early retirement of debt and establishing a capital projects fund.”
Kiwanis Club of Maryville president Robert Russell thanked Jennings for his service. “You’re doing a good job and carrying us forward in a difficult time,” he said.