Stahl: No natural revenue growth -- budget to be cut by 13 percent

By Julie Fann
Star Staff
jfann@starhq.com

  
City council members and Mayor Sam LaPorte, at a special budget workshop yesterday, addressed a 13 percent cut to the city's general budget fund for the coming fiscal year. The new general fund budget is $11,349,110. According to City Manager Charles Stahl, the budget reduction is a direct result of national, state, and local economic conditions.
   "In my 19 years of local government service, this budget process is, without question, the most challenging I have ever experienced. Probably no other fiscal year budget has been impacted by so many financial issues at one time," Stahl said. "We've had to balance this budget in a number of ways because we seem to see no natural revenue growth at all."
   According to Stahl, the nation's economic recession and the Tennessee state budget dilemma only increase the magnitude of local budget problems, the main one being the closing of the Alcoa Water Plant this June. City officials were already struggling to fund $11 million in water/sewer debt created by improvements to the city's wastewater treatment plant, and then lost an additional $200,000 due to the closing of Alcoa.
   As a result, the water/sewer budget has also been cut 33 percent, down from $5,368,425 to $2,588,194. The new budget does not allow for any capital projects or the use of any fund balance at all. The cut also reflects a refinancing of debt, lowering payments and extending them over 30 years.
   The city also decided to increase the city dumpster collection fee from $18 to $20 per pick up, to allow for an increase in landfill costs, and debated imposing a natural gas fee on the United Cities Natural Gas franchise, which could eventually mean an increase in residential natural gas costs. The city didn't hire any new employees and will leave vacant one open position for a mechanic at the city garage.
   The only sign of hope at the meeting was discussion of the possible sale of some Cherokee Industrial Park land to an unnamed industry, which would generate some revenue. In anticipation of those funds, the city council decided to spend approximately $100,000 to pave some city streets, particularly Broad and G streets. "I think it's a gamble if we're going to get that money. At the same time, I think the citizens deserve to see something," said council member Sam Shipley.
   The budget does include a two percent cost-of-living raise for city employees, and Stahl said that employee benefits will still increase 12 percent due to an increase in insurance, worker's compensation, and retirement benefits. There also won't be an increase in property taxes.
   At the end of the meeting, Mayor LaPorte thanked Stahl and Brad Moffitt, the city's financial director. "We have a 13 percent general budget cut, a 33 percent water/sewer budget cut, and no increases in tax rates, thanks to Charlie and Brad," he said.