JONESBOROUGH, Tenn. (WJHL) — Political ads for Washington County Mayor Joe Grandy tout the first-term executive’s record of “whittling down the debt” — but his opponent is taking issue over the numbers.
As Tuesday’s Republican primary nears, Grandy’s challenger, second-term County Commissioner Robbie Tester, has launched his own ad. It says Grandy’s claims of debt reduction during his four-year term that ends in September are misleading.
At the center of the dueling claims? Whether it’s proper to tout debt reduction from $171 million to $137 million while excluding the all-in cost of a new Jonesborough K-8 school (north of $50 million) now under construction from county debt figures.
“The figures that I’m talking about are for the four-year period that I’ve been mayor and when I came in the debt was up here, and today the debt’s down here,” Grandy told News Channel 11. “What may happen two years from now is not current debt.”
Tester told News Channel 11 Grandy’s ad claims may be technically correct, but they’re lacking in context.
“In full transparency, I think people need to know,” Tester said. “People need to know, yes we are getting a school in Jonesborough, but here’s what it’s going to cost.”
News Channel 11 investigated both candidates’ claims, including speaking to the Tennessee Comptroller’s Office (TCO) about what expenses it considers debt that should appear on county audits. We also reviewed Washington County’s audits and both candidates’ ads, emailed them for clarification and then spoke to them on camera.
A Grandy political mailer claims the county’s debt has gone “From $165 to $132 Million so far,” a decrease of $33 million, or 20%. A recently released video ad uses slightly different figures of $172 million and $137 million.
“A reduction of $33 million so far (actually $35 million),” a narrator’s voice says as the first ad’s difference shows up on the screen. “With no tax increases. And two new schools.”
Grandy said the figures represent the county’s general obligation long-term debt from the exact same section of the audit — long-term obligations, general government.
“It’s what was reduced during the term that I’ve served as mayor, so that’s 2018 to 2022,” Grandy said, adding that the final number was based on a projection for the current fiscal year that ends June 30.
“I can understand where he is coming from saying that,” Tester said. “It really, for lack of a better way to say it, it boils down to semantics almost.”
Tester recently released his own video ad that goes straight at the Grandy ads.
“Joe Grandy’s campaign is not telling the whole story about Washington County’s financial situation,” Tester says in front of a map showing the state with Washington County highlighted in red.
“If you added in right now what we’ll owe for the Jonesborough project we would owe a total of around $190 million. That’s a record high and a long way from his number of 137.”
Tester voted against the new school and said he balked at what was projected to be a possible 38-year loan period.
Who’s right? That’s a judgment call
The numbers in Grandy’s ads generally match audit figures. As for leaving the school project cost off his claims, Grandy explained it from a couple of perspectives — when and what.
“The schools will be finished two years from now and we’ll begin paying those lease payments, and it certainly doesn’t have to do with anything in that current four-year period,” Grandy said.
“I’ve never seen any accounting math that talks about future borrowing or future payments of any kind as current debt,” he added.
As to the what, the official borrower is the town of Jonesborough, even though the town doesn’t run a school system. The county pursued that option primarily to avoid the traditional public school financing approach.
Normally, the county would have to borrow nearly as much as it needed for its own school and provide the extra to Johnson City to account for the roughly 48% of total students in the county that attend city schools.
As a result, the county has agreed to a 28-year lease with Jonesborough (the length of the $42.75 million loan) in which it will pay the town an annual amount equal to its debt payment.
Asked whether he considered that to be debt for the county, Grandy said no. He said the USDA bonds Jonesborough will incur are the town’s debt and the county is merely paying a lease amount for the use of the building.
“Think of it as a person leasing a condo. You make the rent payment to the owner who has a mortgage and it’s just that simple,” Grandy said. “The debt is not on the person who’s leasing the condo, the debt’s on the owner.”
That’s not exactly how county budget director Mitch Meredith put it when at February’s county commission meeting, nor how the Tennessee Comptroller’s Office (TCO) explained a situation that will see the building become county property at the end of Jonesborough’s loan period.
“In 2024 we will probably take title to the Jonesborough Elementary School, which has a lease payment associated with it but under the accounting rules it will be treated as debt,” Meredith said during that February meeting. “Once that occurs…you’ll see a bump up in that year of some amount up to $52 million.” (The full figure includes some other obligations associated with the school project.)
TCO Communications Director John Dunn confirmed the following statement from a local government auditor in the comptroller’s office regarding the county’s lease arrangement with Jonesborough. Washington County will essentially pay the town annually to offset its payments on the 28-year loan.
“(O)ur current understanding is that the future lease payments, under the agreed upon financing arrangement, will be recognized as liability (debt) on the county financial statement,” that statement read.
Grandy’s ad is technically correct based on the audit figures used and the timing of when payments will start coming due on the school.
But that additional obligation that’s coming can be traced back to his first term and that’s one thing Tester said motivated him to respond.
“It’s easy to say, look what government did for you and not talk about what it costs,” he said. “It may not technically be on the books yet because we are not in the school but it will be in a year or two.”
The ad’s touting debt reduction and the new school in practically the same breath also played into Tester’s decision to wade in with his own ad.
“It comes out of all of our pocketbooks,” he said. “As taxpayers we all pay the property taxes, we are in a time with high inflation and budget struggles. We are going to have over 50 million hit what we owe in a year or two. It all plays in together.
“In the spirit of transparency and open government, which I firmly believe in, I think it’s very important for folks to know and understand the situation.”
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