Committee holds line on property tax
1.5 percent pay raise approved

By Kathy Helms-Hughes

   The Carter County Budget Committee voted 7-1 Monday night to hold the county property tax rate at $2.22 per $100 assessed value in the proposed budget for the new fiscal year, as well as move 4 cents from Debt Service to the General Fund to try to improve the fund balance.
   The proposed 2003-2004 budget also includes a 1.5 percent cost-of-living increase for county employees and 5 percent cuts for the county's volunteer fire departments and Carter County Rescue Squad.
   John Holtsclaw, chairman of the budget committee, made the motion to hold the line on the property tax. It was seconded by Charles Bayless. Jeff Treadway cast the dissenting vote, saying, "I'm not for raising taxes. I'm not. But we're looking at some things coming up that are going to be very expensive -- land, the jail. We need to set aside some money for capital improvements for the jail."
   If approved by the full County Commission at its June 23 meeting, the $2.22 tax rate would be divided to include 72 cents for the General Fund, 8 cents for the county road fund, $1.24 for schools, and 18 cents for Debt Service. In the current fiscal budget, 68 cents goes to the General Fund, 8 cents to the road fund, $1.24 to schools, and 22 cents to Debt Service.
   According to County Finance Director Jason Cody, moving 4 cents from Debt Service to the General Fund would help improve the General Fund's balance and would not negatively impact the county's credit rating. The temporary reduction to Debt Service would be absorbed easily with forecasted lower interest expenses, he said.
   Total property tax revenue for next fiscal year is right around $11 million, according to Cody. "One cent of property tax will generate right around $49,000, and that's a slight increase from the prior year," he said.
   The General Fund gets most of its money through property taxes. Because most of that property tax comes in at one specific time of the year, the county has a cash flow issue in the General Fund, he said.
   "We have to run the government offices day to day throughout the year, so what we have to do is borrow from Debt Services and basically use that money as cash flow. We pay it back at the end of the fiscal year."
   Last year, he said, the county was authorized to borrow $1 million from Debt Services. They took it in one lump sum and will repay it at the end of this fiscal year. "We do recommend that the interest be forgiven, and that is something that will be brought up in our next commission meeting to be voted on."
   Cody said the county hopes to lessen its borrowing from Debt Services. "We'd like to still be authorized up to $1 million, but we're going to try to limit our borrowing to around $800,000 if at all possible." The county would try to pay the amount off earlier in the year and still would recommend that the interest be forgiven.
   Final cuts in state-shared revenue will have a total impact of about $93,021 to the county budget. "We were originally working with the assumption that it was going to be around $300,000. That was when they were saying 9 percent [cuts]. As you all know, a big piece of that was the gas and fuel tax, which would impact the Highway Department significantly. We actually came out better off than what we were planning originally," Cody said.
   Key assumptions in the Fiscal Year 2003-2004 budget include a 12-15 percent increase in health insurance, a 3 percent increase in Worker's Compensation, a 1.5 percent raise for county employees, no longevity pay, a 3.5 percent interest rate assumed for debt, and a 98 percent collection rate for property tax.
   Cody said, "One of those things that you always try to do, is you basically try to keep your employees up with the cost of living." The proposed 1.5 percent increase is across the board, he said.
   Tom "Yogi" Bowers questioned the increase. "At one of the other meetings, we heard that they were going to give their employees 3 percent raises."
   "I think we were talking about a range," Cody said.
   Bowers disagreed. "I wrote it down. 'Specifically, this includes a 3 percent raise for our employees,'" he said.
   Cody said there were some 3 percent raises mentioned in earlier budget workshops, but that those were from outside agencies and not for anyone in-house.
   Upon questioning, Cody told the group that the cost of living, "based on the CPI for last year, was 2.4 percent."
   "So actually we're going backwards," someone commented.
   "It is slightly less, but let me explain that. In recent months we actually have had inflation down right at 1 percent."
   Bowers asked, "Can you give them a 3 percent raise and still keep the same property tax rate?"
   "It would be challenging," Cody replied.
   Commissioner Jerry Pearman said, "If we give them 1.5 percent, we're really behind. Poor people got to live, the same as rich people."
   Cody said compensation involves not just pay, but benefits as well, "and we do have a fairly good benefits package." The salary structure across the county will be reviewed next year and possibly an outside firm will be brought in, he said.
   The proposed budget as presented Monday night involves a 2-3 percent cut for most departments and a cut of 5 percent for most outside agencies. Funding for the Dawn of Hope has been removed.
   No cuts were proposed for the Health Department, Economic Development Commission, Forensics/Pathology, the First Tennessee Development District, or the Animal Shelter.
   Cody said the county needs to come up with $77,000 locally to meet state teacher's pay equalization of $1.3 million. That money is expected to be generated through new property taxes.