Commissioner Bobby Vannatta makes a comment during the county Financial Management Committee meeting as Finance Director Robert Daniel looks on. (T-G Photo by John I. Carney) [Click to enlarge] [Order this photo]

The subject was raised Wednesday during a study session of Bedford County Financial Management Committee. Commissioner Joe Tillett said he would favor enacting a fire tax district right away, for the 2008-09 fiscal year, while Commissioner J.D. "Bo" Wilson said that was too sudden.

The county is projecting a 5-percent decrease in sales tax revenue next year, coupled with rising costs for fuel and food. The finance committee is trying to head off a general, countywide tax increase by cutting expenditures, and has asked departments to submit austerity budgets.

The funding of rural fire services has been a bone of contention between city and rural residents for decades, and was part of the subject of a lawsuit against the county on behalf of city taxpayers in the early 1990s.

Some city residents claim it is unfair for county property taxes paid by city residents to be used to pay for county services which operate primarily in the rural areas.

As a result of the lawsuit, the county spun off the county-owned fire department into an independent non-profit agency, Volunteer Fire Services Inc. (VFSI), but continued to fund it under a provision of state law which allowed the county to contribute to volunteer fire departments. VFSI has both volunteers and paid employees.

The county even set up a special fund to contribute to services like VFSI out of tax revenues which the county considered to be rurally generated.

Although the lawsuit was eventually settled, some city residents have continued to claim that there is a basic inequity.

Rural residents sometimes counter that it is the city's choice to have a higher level of fire protection and that the city benefits from rejecting county fire coverage and operating its own fire department in the form of lower homeowners' insurance premiums.

Tillett said that "situs-based" taxes -- tax revenue allocated to county government by the state solely on the basis of rural population, not counting city residents -- will only generate $641,806 in revenue in the coming fiscal year, compared to VFSI's projected budget of more than $1 million. If the 5-percent budget cuts being asked of county agencies are applied to VFSI, its operating budget would be $1,045,610 for the 2008-09 fiscal year. Tillett said he supports applying the $641,806 to VFSI and creating a rural fire tax district to raise the rest of the budget.

A rural fire tax district would place a special supplemental tax assessment on property outside city limits to pay for rural fire protection.

Because Tuesday's meeting was a study session only, no vote or action was taken. County Finance Director Robert Daniel said he would research what property tax rate would be required for a rural fire tax district to fund the roughly $400,000 required under Tillett's proposal.

In other discussion at Tuesday's study session:

Insurance bids

The committee heard additional information from Joe Hunt, of H.B. Cowan Insurance, and from John Evans, representing Tennessee Risk Management Trust, about the process by which bids were received for the county's worker's compensation and liability insurance. The bids, from two different insurance pools, both represented substantial savings over the rates the county had been paying.

Last week, the committee voted to buy the insurance directly from TRMT, the low bidder of the two pools, bypassing Hunt as a local agent. Hunt claimed that his work had been responsible for the low bid and that he provides good local service during the term of the coverage. Daniel claimed he had dealt directly with Tennessee Risk Management Trust in obtaining the bid.

There appeared to have been some misunderstandings between Daniel and Hunt over what Hunt was being asked to bid on, and Evans did say that Hunt's intervention was responsible for lowering the trust's bid, perhaps by $80,000 or $100,000, although he said it would be difficult to say with certainty by how much.

Hunt had originally told the county that TRMT did not deal directly with customers and only operated through agents, which turned out to be incorrect. Hunt said he had been misinformed.

Committee members acknowledged Hunt's contribution but said he probably couldn't claim to be responsible for the entire amount of the savings. And the committee said the county government has to look at saving every penny in the current environment.

"If Joe was on food stamps, I might look at it a little different," said Wilson. "The county is nearly on food stamps."

County salaries

County employees will likely have to do without a raise in the new fiscal year. The committee may consider a $200 one-time bonus at the start of the fiscal year, with another one at the end of the fiscal year if sales tax collections improve. That would be less expensive than a salary increase and wouldn't commit the county to any additional spending in future years.

BCEMS station

Bedford County Emergency Medical Services director Chad Graham suggested delaying the opening of the new BCEMS station and headquarters from October until January and said he felt comfortable increasing his revenue projections by $25,000 in order to help pay for six new employees who will be required to staff an ambulance at the new station 24 hours a day.

Finance committee members took no action but noted that even with Graham's suggestions, the cost of the six additional employees would further cut into a razor-thin balance projected for the county's general fund.