Tennessee Comptroller lays out case in court for Mason takeover

Lawyers for majority Black town called comptroller’s effort “overreach,” attorney general’s office say the town’s finances are dire

By: - April 6, 2022 5:51 pm

Town of Mason Mayor Emmit Gooden and Vice Mayor Virginia Rivers in Davidson County Chancery Court to hear their challenge to the Tennessee Comptroller’s financial takeover.

Attorneys for the Town of Mason argued Wednesday that an effort by the Tennessee Comptroller to assert day-to-day financial control over the majority black community represents an “overreach,” marked by irregularities and punitive rules.

“This administration is just asking to be treated fair,” said Terry Clayton, an attorney representing the town, which filed suit on Friday.

But attorneys for the Comptroller, in laying out a history of financial troubles in Mason stretching back 20 years but still apparent in its budgeting choices today, asserted that the financial takeover was intended solely to set Mason back on a firm financial footing.

“It was a choice, a very difficult choice,” to exert financial control, said Jay Urban, deputy attorney general. “The town’s situation was so dire something had to be done.”

The hearing marks the latest step in an ongoing dispute between the Tennessee Comptroller and elected leaders of Mason, a rural west Tennessee community of under 1,500 people.  In February, Comptroller Jason Mumpower gave Mason an ultimatum: either cede control of the town’s charter — a move that would subsume the majority Black, majority Democrat community into majority White and Republican Tipton County — or the Comptroller would take financial control of the town.

Virginia Rivers, vice-mayor of Mason, speaks at a recent community meeting about the Comptroller's plans. (Photo: John Partipilo)
Virginia Rivers, vice-mayor of Mason, speaks at a recent community meeting about the Comptroller’s plans. (Photo: John Partipilo)

Mason’s elected leadership unanimously rejected the request to cede their town’s charter, and the Comptroller then took steps to assert financial control, which was to formally begin Monday.

Under conditions set by the Comptroller, Mason is required to pay more than $9,000 monthly towards its debts — primarily monies illegally transferred from its utility budgets — before paying any other bills, including its payroll.

Any expense of $100 or more would have to receive approval from the Comptroller’s office. In an emergency requiring immediate expenditures – a natural disaster or a rupture in city infrastructure — emergency responders would first have to contact Mason’s financial officer, who in turn would contact the Comptroller’s office for approval.

“Does Comptroller Mumpower have the right to ask a city to give up its township?,” asked Van Turner, an attorney who is also representing Mason. “Is it within the statute for the state to tell the town that anything over $100 has to be approved by the Comptroller?…We think it’s an overreach.”

“There’s nothing a town can do, even a town of under 1,500, there’s nothing a town can do under $100,” he said. He added that the monthly payments for such a small communities would prove to be a “strain.”

Turner said that town leaders, most of whom are Black, have been serious in their efforts to pay back debt accrued, in part, by previous administrations, who were largely white.

“The Comptroller’s office perhaps thinks new leadership is like the old leadership,” Turner told the judge.  “The town is serious. They are trying to make it right and there’s no need to be punitive.”

Turner also questioned why the Comptroller took the unusual step of asking the town to cede its charter. “If your first step is I want your charter, I want you to disappear…’Mason, go away,'” that is not a “very friendly” way to offer assistance, he said.

Under conditions set by the Comptroller, Mason is required to pay more than $9,000 monthly towards its debts — primarily monies illegally transferred from its utility budgets — before paying any other bills, including its payroll.  Any expense of $100 or more would have to receive approval from the Comptroller’s office.

The recent financial history in Mason is in dispute, in part because annual audits that would provide a true picture of payments Mason has paid towards its debts are late. But both sides have preliminarily agreed its current debt to its utilities stands at about $260,000.

“The town has for a long time been using their utility fund as essentially an open line of credit,” said Urban, the deputy attorney general. A state law bars municipalities from transferring payments to meet city budgets from utility districts.

A monthly payment of more than $9,000 toward the debt — a payment that would occur before any other monthly expense would be paid – would eliminate that burden in just over two years.

“To make that debt your first payment is a real solution to a serious problem,” Urban said.

“The Comptroller simply isn’t giving this town unequal treatment,” Urban said, noting that the state has exerted financial control of the city of Jellico, Tenn. and Van Buren County in the past. Each financial oversight agreement is tailored to the individual conditions, he said.

“The Comptroller wants to help. That’s his purpose. That’s his statutory duty,” he said.

Urban also noted the repayment plan is based, in part, on the closing of a federal prison in Mason. The West Tennessee Detention Facility contributed one-third of all payments to the town’s utility operations, leaving those entities with decreased revenues, and making Mason’s financial outlook even more “dire.”

The town has for a long time been using their utility fund as essentially an open line of credit.

– Jay Urban, deputy attorney general

Chancellor Anne Martin, who presided over the hearing, asked Urban — if the prison closure was a relevant factor in creating the financial takeover plan for Mason — why wasn’t the $5.6 billion investment by the Ford Motor Company in a soon-to-be-built Blue Oval City campus also taken into account as a “positive factor.”

Ford Motor Company’s new electric truck and battery facilities, located just five miles from Mason, are expected to revitalize the economies of communities in the region, with a direct and indirect workforce of 26,000, bringing new business, housing developments, retail establishments and other investments to the largely rural area.

While all towns in the area will benefit from Blue Oval, Urban said, “that fact doesn’t bear on the financial condition of Mason.”

There were no witnesses at the hearing, which will decide whether the Comptroller is temporarily restrained from exerting financial oversight. Attorneys for Mason have also petitioned for a declaration from the court that the Comptroller does not have the power to take financial control of Mason, that his actions violate the Tennessee and United States Constitutions and

The NAACP is providing legal assistance to Mason. Janette McCarthy-Wallace, general counsel for the Baltimore-based NAACP, was an observer.

“We were very concerned with this attempt at a takeover of this predominantly Black town,” she said. “We saw nothing in law that caused the Comptroller to take step and we wanted to make sure the citizens of Mason are represented.”

Martin, the presiding judge, set a deadline of April 11 for attorneys representing Mason to file additional written arguments, and the state until April 12 to respond. She said she would issue a ruling in the case by April 15.

 

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Anita Wadhwani
Anita Wadhwani

Anita Wadhwani is a senior reporter for the Tennessee Lookout. The Tennessee AP Broadcasters and Media (TAPME) named her Journalist of the Year in 2019 as well as giving her the Malcolm Law Award for Investigative Journalism. Wadhwani is formerly an investigative reporter with The Tennessean who focused on the impact of public policies on the people and places across Tennessee. She is a graduate of Columbia University in New York and the University of California at Berkeley School of Journalism. Wadhwani lives in Nashville with her partner and two children.

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