Tag Archives: debt

AG says Shelby County not liable for $1.1B

The Tennessee Attorney General opined Tuesday that Shelby County government isn’t responsible for paying the dissolved Memphis City Schools system’s $1.1 billion liability for retiree health benefits unless the County Commission votes to assume the obligation, reports the Commercial Appeal.

So the billion-dollar question is, who is responsible for making the payments against that Other Post-Employment Benefits (OPEB) liability?

On Wednesday, County Commissioners said the city was the responsible party, but Memphis Chief Legal Officer Bruce McMullen said the city isn’t responsible for the liability of a special school district created by the state, and would fight any lawsuits to pay the money.

“There’s no obligation on the city. There is nothing in this,” he said, holding up the opinion, “directing the city to say anything. And I do want to point out to you that this is an Attorney General’s opinion. This is basically an advisory. This is not a judge just ordering or ruling or anything of that nature.”

“I’m not going to opine about who specifically is responsible,” he added. “What I’m going to tell you is that the city of Memphis is not responsible.”

Note: The opinion, requested by Sen. Brian Kelsey, is HERE.

State’s debt down $347M, comptroller reports

News release from state comptroller’s office:
Here’s some great news: The state’s debt continues to shrink.

The State of Tennessee Indebtedness Report, which was released by the Comptroller’s office today, documents how the state’s total debt fell during the last six months of last year by $347 million – or more than a third of a billion dollars.

Of that decrease, the state reduced the debt on its general obligation bonds, which are used to pay for most of the government’s capital projects, by more than $95 million. That’s part of a two-year decrease of nearly $190 million.

Lower debt translates into lower interest payments on money owed, which, in turn, translates into substantial savings for Tennessee taxpayers.

There’s a simple reason why the amount of debt is decreasing – as the state pays down its old debt, it is borrowing less to fund new projects.

“The conservative principles of our state legislators and our governor are reflected in this indebtedness report,” Comptroller Justin P. Wilson said. “This legislature and this governor told their constituents that they would hold down spending in state government and that is exactly what they are doing.”

The indebtedness report comes a few months after a report issued by Fitch Ratings, one of the country’s largest bond rating agencies, concluded that Tennessee’s debt ratio was the lowest in the nation.

To view the indebtedness report online, go to: http://www.comptroller.tn.gov/sl/index.asp.

Fitch Ratings: TN Has Lowest State Debt in the Nation

News release from Lt. Gov. Ron Ramsey:
(July 22, 2013, NASHVILLE) – Lt. Governor Ron Ramsey (R-Blountville) and Senate Finance Chairman Senator Randy McNally (R-Oak Ridge) today announced that Fitch Ratings officially declared Tennessee the lowest indebted state in the union. Fitch Ratings issued the finding in a special report on state pensions last week. The ranking is based on Tennessee’s net tax-supported debt and unfunded pension obligations as a percentage of personal income.
“This news proves once again that Tennessee can outperform any state in the union — even in the Obama economy,” said Lt. Governor Ramsey.  “While the federal government and other states are taxing, spending and leaving their grandchildren the bill, Tennessee continues to balance budgets and pay what we owe. I’m proud of our legislature, our Governor and our constitutional officers for their commitment to a lean and efficient state government that provides necessary services at minimal cost to taxpayers. It is that commitment that continues to attract businesses and families to our great state.”
Senate Finance Chairman Randy McNally concurred in celebrating the news.
“I’m grateful to Fitch Ratings for recognizing Tennessee’s commitment to fiscal discipline,” said Sen. McNally. “We work hard as a state government to live within our means and pay our debts promptly. I look forward every day to participating in Tennessee’s economic success story.”
Fitch Ratings State Pension Update special report published July 16, 2013 revealed that the median level for states’ combined net tax-supported debt plus unfunded pension liabilities measures 7.0 percent of 2012 personal income. Tennessee’s was lowest at 1.8 percent. The nation’s highest percentage was Illinois at 24.8 percent.
Fitch Ratings is a leading global rating agency which provides the world’s credit markets with independent credit opinions.  Fitch, together with Moody’s and Standard and Poor’s, are the three nationally recognized statistical rating organizations designated by the U.S. Securities and Exchange Commission.

UT Official: No State Money for Athletics

No academic funding or state money will be used to bail out the University of Tennessee athletics department should sagging ticket sales and the cost of a multimillion-dollar coaching change cause another budget deficit, officials tell the News Sentinel.
“We’ve made a strong statement that we’re not using state funds to backfill athletics,” said Chris Cimino, vice chancellor of finance. “We’ve done all we’re going to do.”
Last month, the school announced a three-year, $18 million reprieve in donations the athletics department makes to student scholarships, fellowships and discretionary academic funds.
In the meantime, the department is facing as much as $9.4 million to buy out former head football coach Derek Dooley and his staff, another $18.2 million over six years in salary for new coach Butch Jones, $3 million annually for new assistant football coaches and another $1.4 million to buy out Jones’ contract at the University of Cincinnati. Last year, the department reported a $4 million shortfall in its nearly $100 million annual budget.
“While it’s too early to state the exact situation 6½ months from now, our revenues and expenses are on par with what we expected at this point,” UT athletics department spokesman Jimmy Stanton said in a statement, referring to June budget projections.
To cut costs, 17 layoffs were announced in April as part of the consolidation of the women’s and men’s athletic departments. The changes resulted in a $2.5 million saving.

Bredesen Still Promoting Deficit Reduction

NASHVILLE, Tenn. (AP) — Former Tennessee Gov. Phil Bredesen says citizens need to insist on a reduction in the federal deficit.
Bredesen, who served two terms as governor as a Democrat, met with reporters and editors of The Tennessean (http://tnne.ws/TFJzGj ) Monday on behalf of Fix the Debt. The national bipartisan campaign aims to reduce the federal debt by $4 trillion over 10 years. The method would be a combination of higher taxes and changes in entitlement programs.
Bredesen said the group has avoided taking sides in the “fiscal cliff” discussions now going on and cautions against reading too much into statements politicians are making.
He said the more substantive arguments about the size of the deficit will come in the spring.

Whatever Happened to Phil Bredesen?

Philip Norman Bredesen is writing a book, crusading for bipartisanship and federal debt reduction, promoting the study of humanities, making speeches, keeping track of investments taken out of a blind trust and contemplating what to do next.
“I’ve got another career in me. I’ll figure out what it is in a while,” he said in an interview last week.
Three weeks shy of his 69th birthday, Bredesen joked that “I think I’ve gotten younger, actually” since watching Bill Haslam take the oath of office to succeed him as governor of Tennessee almost two years ago — an event he described as “sort of an out-of-body experience.”
Interestingly, Bredesen did not rule out re-entry into the political arena as a candidate for something in 2014 when asked about the possibility. That is a contrast to the latter part of his reig as governor when he flatly declared he would not run for any political office in 2012.
Bredesen says, “There’s no message there.” He’s just keeping options open.

Continue reading

Stewart Has Been Sued for Debt; DesJarlais for Malpractice

Debate in Tennessee’s bitter 4th District congressional campaign turned over the weekend to the respective candidates’ past legal problems, reports Andy Sher.
Democrat Eric Stewart was sued by Citibank in November 2011 for failing to pay on nearly $5,000 in credit card debt, Franklin County General Sessions Court records show. Republican incumbent Scott DesJarlais, a physician, has a “history” of medical malpractice, state Democrats claim, citing claims in 1991 and 2004.
Citibank sued Stewart on Dec. 6, 2011, a little over a month after the state senator and insurance agent announced he was running for Congress. DesJarlais campaign manager Brandon Lewis said the lawsuit underscores a pattern of financial mismanagement that makes Stewart unqualified to tackle the nation’s debts.
“When Tennesseans are struggling to find jobs, we can’t count on someone with failed businesses, multiple IRS tax liens and warrants for unpaid personal debts,” he said. Small businesses “know that Eric Stewart’s support of Barack Obama’s policies and Obamacare will mean additional tax burdens that may put them out of business and cost Tennesseans even more jobs,” Lewis said.
Attorney Bill Shick, who represented Citibank, said Stewart settled the debt Dec. 27, 2011, but the suit wasn’t officially dropped until March 6.
…Already rocked by revelations that DesJarlais dated at least two patients while separated from his first wife, his campaign over the weekend responded to new charges by the Tennessee Democratic Party that his medical practice shows a “history of lawsuits.”
Democrats cited a 1991 malpractice suit in Kansas and Tennessee records indicating he settled a malpractice claim here in 2004.
Kansas court records show a hospital, DesJarlais and another doctor were sued in a case involving a newborn they delivered who had a severe form of cerebral palsy.
After a difficult labor, the other doctor determined a caesarian section was necessary and instructed a nurse to push the baby’s head up the birth canal to accommodate the procedure, according to a Kansas appellate court opinion.
The jury ruled in favor of DesJarlais and the other defendant, and the appellate court upheld the ruling.
And Tennessee Health Department records show DesJarlais in 1994 settled an “above average” malpractice claim of at least $75,000. The records contain no additional information, and Democrats said they could not find a publicly filed lawsuit. A Democratic Party spokesman said the actions raise issues of trust.

Bredesen, Dunn Back ‘Fix the Debt’ Campaign in TN

Former Republican Gov. Winfield Dunn, former Democratic Rep. Lincoln Davis and two members of former Gov. Phil Bredesen’s cabinet appeared at the Legislative Plaza Wednesday to declare support for “Fix the Debt,” an effort to pressure Washington lawmakers to reduce the federal debt.
They said former Gov. Phil Bredesen is also part of the effort, though he wasn’t on hand.
From Chas Sisk’s report:
The group has launched a $30 million nationwide advertising campaign meant to build bipartisan support for reducing the nation’s $16 trillion debt through a mix of tax increases and spending cuts. The Fix the Debt campaign will urge Tennesseans to sign a petition calling for debt reduction, but it will not donate to any candidates or advertise on their behalf.
“We here in Tennessee want to be absolutely certain that we convey at every opportunity the seriousness of this indebtedness and the responsibility of every citizen to be willing to speak up and speak out,” Dunn said.
Co-chaired by former U.S. Sen. Alan Simpson and former White House chief of staff Erskine Bowles, the National Commission on Fiscal Responsibility and Reform said two years ago that the nation could reduce its debt by eliminating many income tax deductions, reducing tax subsidies and entitlements, raising some taxes and cutting others. The commission said its plan, which it released after more than seven months of deliberations, would put the nation on track to surpluses in seven years.
The recommendation failed an initial vote in Congress and has laid dormant ever since.

Comptroller’s Report: State Debt Down $257 Million

News release from comptroller’s office:
The Comptroller’s office has released the semiannual State of Tennessee Indebtedness Report, which can be viewed online at http://www.comptroller.tn.gov/sl/
The report provides an overview of the state’s debt for the period from Dec. 31, 2011 until June 30, 2012 and other debt-related activities for fiscal year 2012.
During the period, the state’s overall indebtedness decreased by about $257 million. Also, refinancing of some debt created a present value savings of $61 million. And the state maintained high bond ratings from the country’s three major rating agencies.
“This report contains good news for the taxpayers of Tennessee,” Comptroller Justin P. Wilson said. “Our state has low debt, high credit ratings and well-managed finances. With the strong fiscal leadership provided by the General Assembly, we certainly expect those positive trend lines to continue.”

Kelsey Bill Requires Some Local Governments to Get State OK for Bonds

News release from Senate Republican Caucus:
(NASHVILLE, TN) December 7, 2011 – State Senator Brian Kelsey (R-Germantown) introduced a bill today to help reduce local government debt. Senate Bill 2158 requires counties and cities carrying debt in an amount larger than 10 percent of their taxable assessed value to submit all future issuances of debt to the Tennessee State Funding Board for approval. The legislation is the ninth in a series of announcements by Kelsey in his “12 for ’12” initiative for the next legislative session, which is set to reconvene January 10, 2012.
“Too much debt leads to economic ruin,” said Sen. Kelsey. “Just look at Greece and even at Birmingham, Alabama for examples of what not to do.”
Currently, there are no limits on the amount of debt a local government may hold in Tennessee. The Comptroller counsels local governments to adopt fiscally responsible debt policies. The Comptroller’s Office of State and Local Finance recently distributed model debt guidelines to local government entities that borrow money and directed them to draft binding debt management policies by January 1, 2012. Local governments are also directed to provide for public accountability and transparency which must be included in their debt policies.
Senate Bill 2158 would, in addition, require local entities with excessive debt to submit proposed debt issuances for approval by the state Funding Board. Current members of the Funding Board are Governor Bill Haslam, Comptroller Justin Wilson, Secretary of State Tre Hargett, Treasurer David Lillard, and Commissioner of Finance and Administration Mark Emkes.
“Local government debt is killing our taxpayers,” said Sen. Kelsey. “It leads to higher property taxes and leaves our children and grandchildren with bills they cannot pay. If Shelby County paid off its debt today, it could reduce your property taxes by 16 percent.”
At $1.6 billion, Shelby County’s debt load rivals that of the entire state of Tennessee, which owes $1.7 billion. In contrast, according to the Wall Street Journal, Tennessee state government is ranked among the best in the nation for lowest debt per capita.
Several states regulate the amount local governments may borrow. The Kelsey bill proposes a system similar to one successfully used by North Carolina. Under North Carolina state law, local government debt is capped at 8 percent of the entity’s assessed taxable property value and all local debt issues are contingent on approval by the state Local Government Commission.
Many other states, including Georgia, West Virginia, Virginia, Oregon, and Utah set a strict debt ceiling for local governments, ranging from 3 percent to 10 percent of assessed or real market value.