JELLICO, Tenn. (WVLT) -- Jellico is in a lot of debt - the IRS placed a lien on the city in July for back payroll taxes and penalties, adding up to more than $160,000. Add to that the civic center with a $190,000 bill, a $40,000 paving debt, plus nearly $80,000 for police and fire trucks. That's nearly $500,000 - but Jellico has just $85,000 in the bank.
"Late Thursday afternoon the Comptroller's Office was in coversation with us and talked about a funding bond issue for the City of Jellico," said Mayor Les Stiers.
It's called the "Option of Last Resort" and it gives the city permission to get a loan and pay off all of its debt immediately. But it also means the state is now in control of all of the city's money. Jellico will have no lines of credit and will operate on a cash-only basis.
"What they are doing is they're making the city of Jellico be accountable, number one. Responsible to the citizens for the services we're providing," said Stiers.
There's mixed opinions around town about the deal.
"It's probably a good thing. The city has dropped the ball, you kno? By not doing what they need to do," said Greg Morgan.
"Is the local police - are they going to have the same jurisdiction or get terminated or what?" asked Paul Kellogg.
Mayor Stiers said this won't affect city services or employees at all, although he's not sure if the state will be able to tell the city exactly how to spend its money or where to make cuts if they're needed in the future.
"That's still undefined right now. Again, we've only talked to them as of last Thursday and we're still in the early stages of seeing what we can and can't do," said Stiers.
In any case, he's hopeful the deal will get Jellico back on sound financial ground.
Stiers said they're still crunching numbers, but the loan will be for at least $400,000 and Jellico will be paying it off for the next 20 to 30 years.