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Lawmaker Wants to Reduce Local Government Debt - John Dunn

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NASHVILLE, Tenn. -- There is a new focus on the ever-increasing amount of government debt. One state lawmaker believes some Tennessee cities and counties are playing with fire.

Right now if a city wants to build a new project, it often goes into debt to make it happen. Those decisions are made at the local level, but one state senator says some projects should also come before the State Funding Board. "Both Detroit and Birmingham have had major problems and have ended up declaring bankruptcy, and we want to make sure that no cities in Tennessee end up in that situation," says TN Sen. Brian Kelsey, (R) Germantown.

Kelsey's plan would apply to cities with large amounts of debt like Nashville and Memphis. The local government would have to go before the State Funding Board before it can take on more debt. Cites or counties with at least one bond rating lower than AA would also have to go before the board. Kelsey's proposal would also apply to any city or county which plans to take on debt similar to balloon mortgages, in which payments are low in the beginning but eventually balloon out of control.  "So they may just be paying a little bit of interest on the front end, and then putting off high payments until five and 10 years down the road, often times when those local government officials have left office," says Sen. Kelsey.

Many local elected leaders are likely to challenge the idea. "The state should not come into Davidson County or Shelby County and tell us what to do," says Metro Councilman at-Large Jerry Maynard.

Maynard believes the state and Senator Kelsey should stay out of local business. "It is up to us to determine what is in the best interest of Davidson County. Senator Kelsey can keep his opinion, but no one in Davidson County has voted for him one time," says Maynard.

Senator Kelsey believes a change is needed to protect taxpayers. "Ultimately this bill is going to lead to lower property taxes for our citizens, and more importantly for our grandchildren when they have to pay back on these bonds," says Kelsey.

Metro Finance Director Rich Riebling did not want to comment on this proposal because he has not read Kelsey's proposed legislation. 

Senator Kelsey is calling this one of his top priorities for this year's legislative session. Lawmakers will begin debating this idea on Capitol Hill later this month.

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