Faced with having to pay the City of Monett $600,000 while operating in a recession, the Barry County E-911 Board announced last week that it could declare bankruptcy if the board's current financial position does not change.
Board President Jon Horner presided over a public meeting on May 24 that was attended by area fire chiefs, local members of the press and representatives from the City of Monett. The purpose of the meeting was to publically lay out the board's financial situation in light of the recent court ruling that favored Monett in the ongoing tax increment financing (TIF) lawsuit.
"Barry County E-911 did not create this situation," said Horner. "We've been minding our own business. We got the tax passed six years ago, we set up the board, started building the center and equipping it and got it operational.
"Then in the last year, we've been hit with a financial perfect storm," Horner continued.
Horner described the E-911 Board's involvement in the lawsuit, which according to Horner, began with an exchange of letters over Monett's contention that Barry County E-911 and the Lawrence County Judicial Center should have been paying a portion of their sales tax revenue to Monett's TIF district.
"Then in the middle of this, the Barry County Commission (and the Lawrence County Commission) stopping paying into the TIF," said Horner. "When they stopped paying, the lawsuit was filed. And let me be clear, we, Barry County 911, were sued by Monett."
To date, the Barry County E-911 Board has spent over $165,000 in legal fees on the lawsuit and been ordered to escrow $262,173.46 for possible payment to Monett. In addition, Horner said sales tax revenues are down approximately $200,000 over the past two years due to the recession.
"The recent decision in the Monett lawsuit has placed Barry County E-911 in serious legal and financial position," said Horner.
As a result, Horner said the E-911 Board has filed a motion asking the judge to reconsider the recent court ruling. The judge has until Aug. 10 to make his decision.
If the judgment stands, Horner said Barry County E-911 would have to pay Monett approximately $600,000 as well as ongoing monthly tax payments toward the TIF of $2,000 to $4,000.
In addition, the board could also be looking at paying a third of the legal costs incurred by Monett during the lawsuit, which as of mid-May stood at $355,255.03.
Since the lawsuit was filed in July of 2009, Barry County, Lawrence County, Barry County E-911 and the City of Monett have spent a total of $806,420.73 in legal fees.
"Barry County E911 is very important to the safety of all citizens of Barry County and those visiting our county," said Horner. "The Barry County E911 Board is determined to have E911 remain in place, but the reality is that we are facing severe challenges, including potential bankruptcy."
In recent months, the E911 Board has instituted spending cuts in response to its financial problems. No layoffs were necessary but the board has opted not to fill four positions when employees left. One of those positions is the mapping position, which was held by Mike Phillips, who now serves as Barry County E911 director. Phillips now handles mapping as part of his director's position.
"We will continue to look for ways to cut costs, while keeping 24 hour dispatching and emergency services available for every community in Barry County," said Horner. "But we're at a point where we cannot cut any further without jeopardizing our ability to respond to emergencies."
The board is also looking at the possibility of filing Chapter 9 bankruptcy if it loses the lawsuit.
Horner said he did not know of a government entity in Missouri that had ever filed for Chapter 9 protection, so the specifics of what a bankruptcy would mean to the local E911 system remain unclear.
"We would continue to pay our bondholders here," said Horner. "I don't know what would happen in regards to our judgment owed to Monett.
"For us, bankruptcy would just be a matter of surviving," Horner continued. "Our board would remain intact and it would allow us time to continue to operate. Bankruptcy is not a threat but a reality. It could be the only way to save us."
Another option would be to go back to the voters and ask for an additional sales tax to support county E911 operations.
"We're going to need additional enhancement to our revenue moving forward," said Horner. "A quarter cent was not the right amount for us to have from the get go. We probably needed three-eighths of a cent to operate."
Cassville Fire Chief Millard Andrews reminded the E911 Board of the support the center has received from the Barry County Fire Chiefs Association.
"We put it all on the line for this," said Andrews. "It's a shame the counties have spent almost $1 million on a lawsuit. That's $1 million of taxpayers money that just went down the drain."
Harold Schelin, treasurer of the Barry County E911 Board, shared Andrews' frustration.
"The lawsuit has gotten out of hand," said Schelin. "Once we got started on it, we couldn't get lose from it. We have spent an abnormal amount of money on this lawsuit."
Exeter Fire Chief Jim Matthew said his department would have a very difficult time functioning without a county-wide E911.
"It would be disastrous to be without 911," said Matthew. "I'm satisfied the other chiefs feel the same. Don't get me wrong, 911 has its faults but it is 100 percent better than what we had, so we need to do whatever we can to keep it."
"Our top priority is to provide high quality dispatching of emergency needs 24 hours a day, seven days a week for all Barry County citizens, our businesses and the children in our schools," Horner said.
Other members of the E911 Board who were present at the meeting included Richard Asbill, Leonard Witt and Danny Dalton. Mick Epperly and Mike Redshaw were unable to attend the meeting, because they were helping with search and rescue efforts in Joplin. Phillips was also present at the meeting.
Monett representatives respond to BarCo 911 Board
Representatives from the City of Monett attended the public informational meeting conducted by the Barry County Emergency Services Board on May 24. The city appreciates the 911 Board's willingness to begin a public dialogue relating to the financial issues confronting the board. The Board's budget problems were set in motion before the litigation began and were only made worse by their legal expenses resulting from the lawsuit and the subsequent judgment in favor of the City of Monett. In its statement, the 911 Board indicates that it may file for Chapter 9 bankruptcy if the court's decision isn't overturned. If this occurs, it will not affect 911 service within the city limits of Monett.
From the City of Monett's perspective, the dispute with Barry County 911 and Lawrence and Barry counties has never been about anyone taking money from anyone else, and there is misunderstanding about whose money is actually at issue. No one wins by suggesting otherwise, and the City of Monett remains hopeful that a solution can be found short of continued litigation.
Tax increment financing (TIF) districts were created within the City of Monett to eliminate blight, to encourage development and to increase the tax base. The school district, counties and other taxing entities in Monett all had representation on the TIF Commission. Studies were conducted, plans to improve the roads and highways were approved, and bonds were issued to pay for these public improvements. No taxing entity received less than they received prior to the establishment of the TIF, and the City of Monett and counties received additional sales tax revenue that came from the new business expansion within the TIF.
Only a portion of these new sales taxes generated within the TIF district are used to repay the bonds. The City of Monett must allocate a share, and the counties and Barry County 911 must allocate a share. The allocation of tax revenue within a TIF district is determined by state law, not by the city.
Monett's use of tax increment financing to make improvements to the transportation system within the city and counties has been a success by any measure.
The litigation resulted when the counties stopped making the allocations they had been making for years, and when Barry County 911 indicated it would not allocate its portion of sales tax revenue to the TIF districts. Both the city and then the counties and Barry County 911 sued each other (the counties and the 911 Board through what is called a counter-claim).
The City of Monett understood that it had a legal obligation to collect taxes that state law required it to collect. The trial court has agreed. The 911 Board indicated that they will file an appeal, which will require all of the parties to incur further legal costs. The funds that are owed to the TIF from the counties and Barry County 911 remain in escrow and unavailable to the City of Monett to pay its bond obligations. It is to everyone's benefit that this issue be resolved as quickly as possible without further delay or expense.