If Walker County were forced to pay back — immediately and in full — a nearly $9 million debt to Erlanger Health System, it would break the county, Commissioner Shannon Whitfield says.
Erlanger, in motions filed Dec. 5 in U.S. District Court for the Northern District of Georgia Rome Division, says it wants the full amount now.
"To pull $8.7 million out of our budget to pay Erlanger in a year would be catastrophic to our county," Whitfield said Thursday, Dec. 7.
"If we are forced by a federal judge to do so, the state may have to step in and take over," he said. "We will not have the money to operate, or either we will have to shut down aspects of our county government, because we would not be able to sustain the balanced budget that we have put in place, which is already tight."
Erlanger, in its filing, argues that the county has the money on hand and is simply refusing to pay.
"That's far from the truth," Whitfield said. "We have no problem with providing the evidence that we are operating on borrowed money and that we do not have the cash to pay them this debt (in full and now)."
The commissioner said if the federal court ordered the county to pay the $8.7 million in full at this time, the county would have to amend its budget by cutting every department a minimum of 30 percent.
Whitfield said an emergency meeting would have to be called to make this happen.
Whitfield added that given the department heads are already saying they are struggling with the current budget cuts to operate under, to cut it again by 30 percent would be catastrophic. It would place citizens in need of services, including police, fire and emergency services to name a few, in jeopardy.
Whitfield said most offices would have to move to a reduced hourly schedule and the county would not be able to afford to operate at a 40-hour-per-week schedule and services offered would have to be cut back substantially.
"It would be ugly," Whitfield said.
County doing its best
Whitfield said the county is moving as quickly as it can to pay off the debt.
Tax bills were sent out Oct. 13, earlier than normal, and are not due until Dec. 20, Whitfield said.
Some of that money, Whitfield said, has begun to trickle in and the county hopes by the first of the year to have some money to make a payment on the debt.
"This is going to be a three-year process. We are not going to have the money to pay them all at one time," Whitfield said.
"If we had taken and imposed the taxes that it would take to settle this in one year, we would put many of our citizens into bankruptcy and you would see many businesses in Walker County having to close, because they are not able to pay their taxes," Whitfield said.
Whitfield said the county's expenses have already been cut by $2.5 million. There were $2 million in requests from departments and other elected officials that the county was not able to accommodate. The county is already working with a very "reduced, tight budget," he said.
"Even paying it over three years is going to be very painful — financially — for the citizens of Walker County to be able to pay this that fast," Whitfield said.
Negotiations between the two parties ceased some time ago, but Whitfield said the county hopes to be able to negotiate an out-of-court agreement with Erlanger.
"There has not been any court date set — to my knowledge — at this point," Whitfield said. "We are still hopeful we can settle something out with this. There is still time to do that we feel, but they are going to have to be realistic on what our abilities are financially. We don't have a problem in providing them information and data to show them what our financial ability is."
Whitfield said his administration has been very transparent with Erlanger, even more so than the past administration. Whitfield took office in January.
Asked if Erlanger is aware of the financial distress the county is in, Whitfield said Erlanger is smart enough to read the county's financial audits, which show the county has $70 million worth of debt and a negative net position of $7.5 million.
Government shut down?
The commissioner said it is unclear how the state of Georgia would react to stepping in to run the county if the county was financially unable to run itself.
"It would be very sad that a hospital — a Tennessee-based hospital authority that was put into place by the authority of the state of Tennessee — would actually come in and cripple a neighboring state and county over 35 months of paying out a debt," Whitfield said. "That Erlanger is so narrow-focused in the dominate position that they are taking to not allow us the additional 35 months to work through this debt."
Whitfield said it is getting to the point that the leadership of Tennessee and the leadership of the governor's office in the state of Georgia will obviously have to get involved.
Asked what citizens would expect in this possible scenario, including the fear it could raise the cost of services or even do away with them, Whitfield said there is already a tax increase in place. The only other options the county would have at this point would be to start shutting down different aspects of the government if the state doesn't step in first.
Whitfield said if there was a federal court order to impose a second round of tax increases, that would all be at the hands of the CEO of Erlanger and it would not be anything he would do unless the county was ordered to do so.
"All of the hard work that we have done over the last 11-plus months in putting a plan together to be able to systematically and mathematically pull Walker County out of the financial ditch would all be — potentially — thrown out of the window with Erlanger's attempt to bulldoze their way into North Georgia," Whitfield said. "I'm beginning to believe this is more about them positioning themselves with new facilities versus doing the right thing and coming to a compromise on a debt that I inherited from the previous administration."