According to a report Finance Director Tracy Blair distributed during a Budget Committee meeting earlier this week, the county will have $18.8 million in available funds for fiscal year 2016 from property taxes and other revenues compared with an expense budget of $16.5 million, which could bring the county general balance down to $2.3 million by June 30, 2016.
Based on a recommendation from the University of Tennessee County Technical Assistance Service, the county’s fund balance should hold at 30 percent of the expense budget, or about $5 million.
Budget Committee member Henry Cullen, who indicated the panel was two-thirds complete on the new budget, said the panel hasn’t recommended a large cut to any one department.
“We went through every department and every line,” Cullen said. “I mean we didn’t go to one section. We didn’t say we took $800,000 for one section. We went line-by-line through each department and everybody got a bite.”
Budget Committee member Van Shaver said the committee did not make any “draconian cuts” to the proposed budget.
“It was just general across the board, and no single department took any major blunt cuts,” Shaver said. “... It was just a matter of a little here and a little bit there, and it adds up.”
Loudon County Convenience Centers Director Chris Parks identified “several thousands” of dollars of savings in his budget, and the committee eliminated any requested county pay increases off the top, Shaver said, noting that some department heads asked for 2 or 3 percent raises for employees.
“What we decided on the front end to do is off the bat take out any salary increases,” Shaver said, noting that any across-the-board salary increases for county employees will be considered at one time near the end of the budgetary process.
Shaver said the anticipated county general fund shortfall of $1.7 million could balance out once all expenses and revenues were factored into the budget during the next two months.
“That number is derived from the budget estimates, and what historically happens on budget estimates is the expenditures generally are not as high as anticipated, and the revenues are generally a little higher than anticipated,” he said.
During the Budget Committee meeting, Mayor Rollen “Buddy” Bradshaw said the county will have a better understanding of its financial situation after this budget cycle.
“(At) the end of this budget process, we’re going to know exactly where we stand ... and we’ll have a true number of where we’re at at this stage in process,” Bradshaw said. “I think we’ve hit a bottom line on everything.”
Shaver said he would not go so far as to say that the county has hit a “bottom line” on budget cuts. “We didn’t really cut anybody anything,” Shaver said in the meeting. “I mean, we haven’t made hard cuts. We haven’t made the kind where people are crying, weeping and wailing and gnashing teeth.”
Cullen said while the committee trimmed more than $800,000 from the funding plan, the county still had a “ways to go” in making up the difference in the fund balance.
“That’s huge though, Henry, on a $16 million budget that would be 5 percent,” Shaver said. “To walk in and make a 4.8 percent budget cut without really hurting anybody, that’s pretty impressive,” Shaver said.
Blair said while the county did not necessarily need to make up the reduction in the fund balance in one year, if the county considers issuing debt in the future, creditors will evaluate the fund balance as a measure of financial stability.
“This is the one that they put under the microscope,” Blair said. “This is the one that they want to see some evidence of fiscal responsibility.”
Cullen said during the meeting that for the county to make up the difference in the fund balance at one time, a 10.4-cent tax increase would be needed to generate $1.7 million in revenue at $160,000 per tax penny. In a follow-up interview, he said the county was looking at a potential 20-cent increase if the Loudon County Board of Education’s requested budget increase of $2.1 million was passed. “Right now, I’m not in favor of that,” he said about raising the county tax rate in order to increase the BOE budget.
Shaver said during the meeting that talking about raising taxes was too preliminary. “The thought that we would be wringing our hands over whether or not we have a $2 million, $3 million or $4 million fund balance, and the thought that we need to even entertain any kind of tax increase because our fund balance is getting lower than we want, I can’t even get to that,” he said. “When it’s time to, I think, say, ‘OK, we can’t afford anything else,’ it’s when you don’t have anymore money (and) you can’t pay your bills.”
He said the county doesn’t have a state-mandated fund balance, and the 30 percent figure was just a recommendation. “Our fund balance should be what our organization feels that it should be,” Shaver said. “It should be enough that we’re not going to be caught off guard and have to take drastic measures, but it doesn’t need to be so high that it’s just a lot of money sitting there not being utilized for the taxpayers.”
Cullen said during the meeting that he was pleased with the cuts the committee recommended. “Out of all the discussions, I’m happy to hear we got it down $834,000,” he said.
The committee plans to consider the BOE budget request at 4:30 p.m. Thursday at the county office building.