Letter to county from state comptroller

EDITOR'S NOTE: The following is Comptroller Justin Wilson's letter to Cannon County government. (See stories on Page 1)

October 7, 2016

Mike and Board Gannon, County Mayor
and Board of Commissioners
Cannon County
Public Square
Woodbury, TN 37190

Dear Mayor Gannon and Commissioners:

Cannon County is in a financial management crisis.

We understand that as of the end of August 2016, the County had spent 20% of its fiscal year 2017 annual appropriations. At this rate of spending, the County will not have enough money to meet its expenses through the end of this fiscal year. Cash flow forecasts for the General Fund provided
by the County indicate that it spends more than its receipts for seven out of twelve months. As of the end of September, the County has already borrowed $920,322 in tax and revenue anticipation notes, which represent 18% of its projected annual cash receipts and are required to be repaid prior
to the end of the current fiscal year. Additionally, the County has to begin repayment of over $1,000,000 it spent from debt service monies restricted for education. Due to its continuing financial distress, the County has now requested additional borrowing authority for operational expenditures.

We believe that Cannon County is at a crossroads. The Commission needs to take immediate action to control the County's spending and overall financial situation. Without strong, decisive action by the Commission, the County will spend more money than it receives during fiscal year 2017, as it has every year since fiscal 2012.
Based on the above, and pursuant to the authority of T.C.A. 9-21-403, the Comptroller directs the County Commission and other officials to take the following actions to insure compliance with the statutory case basis budget requirements and to successfully manage the financial affairs of the County:

The County's finance staff shall provide budget-to-actual and cash flow reports for all major, special revenue and enterprise funds at each regular meeting of the County commission and furnish copies _ of these reports to the Office of State and Local Finance (OSLF),

* the County Commission shall adopt a budget policy approved by OSLF that requires it to maintain a balanced cash-basis budget that only allows spending if cash is available or is approved by OSLF,

* the County Commission shall adopt a cash management policy approved by OSLF,

* the County Commission shall determine, with the assistance of OSLF, the level of cash necessary to provide working capital sufficient to maintain a balanced budget, and

* the County Commission shall cease improper interfund borrowing from its debt service funds to finance general government operations.

If the County chooses to not follow these directives, the Comptroller may take such other action deemed appropriate including, but not limited to, exercising his authority under T.C.A. 9-21-403 to take control of the County's spending.

We look forward to working with you to resolve the current financial management crisis and placing the County on a sound financial basis.

Sincerely,

Justin P. Wilson
Comptroller of the Treasury