Cities prepare for difficult bud

Parker Wright news-herald.net

Annual budget preparations are approaching as Lenoir City and Loudon assess the financial impact of COVID-19.

Numerous businesses were forced to close or adjust in March and April. Governments must use tax revenue estimates for the two months since real data won’t be available for at least another month, Maggie Hunt, Lenoir City recorder/treasurer, said.

“I talked to the state comptroller because I wanted to know what are other cities doing because everybody’s in the same situation that we are,” she said. “He says they’re passing a budget, estimating what they think the numbers will be. What we’re going to do is look at our budget in six months after we pass this new budget and see if we are making more revenue than we thought we would. Are our expenditures higher? Then we’ll do adjustments then because we’ll know more about how the virus has affected everything across the board in six months.”

Loudon is looking to the University of Tennessee Municipal Technical Advisory Service for guidance.

“The budget will be impacted by COVID because … we can only estimate and project reduction in revenues,” Ty Ross, Loudon city manager, said. “In that regard, we’re following the herd, and we’re going with MTAS projections that show state share funding that’s coming out from state-collected revenues like sales tax, beer taxes, gas taxes. They collect all that money and distribute it out to the cities based on population, but they’re projecting a 10 percent reduction in that revenue. So that’s what we’re projecting for the city of Loudon revenues in general is a about a 10 percent reduction.”

Fortunately, a majority of Loudon’s revenue — close to 50 percent — comes from property taxes, which haven’t been affected by the pandemic, Loudon Mayor Jeff Harris said.

Hunt said Lenoir City is hoping big box stores like Walmart and Home Depot can pick up whatever slack is caused in other areas of the community. Hunt has been told those stores have been experiencing record sales and trusts that can balance the city’s numbers.

In the event it can’t, Lenoir City will dip into reserves.

“Luckily, we have a great fund balance,” Hunt said. “We have prepared for something like this happening. We have a $4 million fund balance. By the state’s recommendation, $2-2.5 million is what the fund balance should be. So we are really prepared for this kind of situation.”

Lenoir City Mayor Tony Aikens said the city will use reserves before even considering raising taxes.

“The main thing is they can expect to see no tax increase,” he said. “… We believe that because of the amount of reserves we have built up for emergencies, and certainly this is an emergency, that we can dip into the reserves … and balance the budget. We anticipate the budget being $200,000-plus short, and it may be more than $500,000 short. That’s a lot of money for Lenoir City government. … It’s tough times, and we’re certainly not going to burden the taxpayers.”

Ross will recommend holding steady to Loudon City Council at Monday’s workshop.

“We are not recommending to the council any reduction in service,” he said. “What we are recommending to the council is a static budget from which we want to spend on personnel, payroll and benefits and head count, what we spent last year, but no increases other than the prior promise or assurance of adequate funding for the health plan. … Normal times, you might look to if there’s enough money coming in to enhance services, whether it be with additional headcount or higher pay for existing head count in the form of raises.”

The proposed budget will also limit capital expenditures to “just gotta have stuff,” Ross said.

“There are a few things that we’re going to spend our focus on for some investments in the community that are needed,” Harris said. “Queener Road, that construction’s going to start early fall, so we have to set funds aside for our portion of that. There’s a need for a new fire truck, and instead of paying for that all at once, we’re going to take a financing approach and spread that out over five years so we don’t liquidate our general fund so much. We’re looking to do a lot of paving … and looking at maybe going into debt service for that because it’s really affordable right now.

“The police department needs new computers for their vehicles … and we’ve worked out a plan to do half this year and half next year,” he added. “The public works department needs a new leaf machine, and that’s something that’s been put off and put off. We’re keeping things to a minimum and keeping our budget as static as we can keep it.”

County preps for budget

Jeremy Nash news-herald.net

Loudon County commissioners are preparing for the coming fiscal year budget that will likely have its fair share of challenges.

Loudon County Mayor Rollen “Buddy” Bradshaw said the final rendering could be about three or four budget committee meetings away from being ready to present to Loudon County Commission. Hopes are to have the budget passed June 29.

“We certainly have lost several revenue streams that won’t be back for a while,” Van Shaver, county commissioner, said. “Some sales tax losses won’t be made up, hotel/motel tax revenue won’t be made up, those are just lost. Our biggest losers are in our court system where we have court costs, fines and fees that are paid. Nothing’s come in there hardly, and those are very large revenue streams. The court clerk’s office where you have your car tax registration and such like that, those are delayed. They will ultimately come back but it’s going to be several months before we see the return of that.

“... It’s going to be a very challenging year,” he added. “We’re going to be better than some jurisdictions. Our very conservative budgeting over the years is going to be very beneficial right now, but it is going to be a challenge and there could be some problems. The big story probably is going to negatively impact our ability to build anything new for the courthouse fire, annex, that sort of stuff.”

Money initially committed for a new courthouse project will help the budget, Bradshaw said. One-time grant funding of $911,423 from the state will allow commissioners to divert capital projects money toward other needs.

“It’s going to be a challenge because we don’t know the net effect on the coronavirus on the revenue stream,” Henry Cullen, county commissioner, said. “... You either cut enough to make up for it, go to the fund balance or increase taxes, none of which have been proposed or even thought about right now. We’re just waiting to see where it all comes out.”

Bradshaw doesn’t believe there will be a need for a tax hike.

“I can’t foresee the need for a property tax increase, but again, because of our very, very conservative budgeting over the years, the growth of the penny we picked up a little bit of extra penny value,” Shaver said. “We have some pennies that we can shift from fund here, fund there that are going to help us pick up about 4 or 5 pennies that hopefully will help offset all of our losses. The pennies we were planning to build the new annex very likely could be cannibalized in this and could put us way, way down the road in building any kind of building.”

Even though the budget has been challenging, Bradshaw believes there have been “pleasant surprises.”

“Property tax, none of this really started happening in Loudon County until after the deadline so we’ve got over 99 percent of property tax has been collected,” Bradshaw said. “Usually we’re very good about property tax so that’s another great thing. We budget at 98 percent of expected revenue and typically we will collect over 100 percent of our expected revenue.”

Sales tax revenue has also been positive, he said.

Loudon County Schools presented its budget to commissioners Friday. Shaver said the Loudon County Board of Education has requested $320,000 in new money, and if the county moves forward with a 2 percent raise for employees, school officials would like funding.

Loudon County Director of Schools Micheal Garren said $320,000 was what the district needed to balance its budget. An additional $480,000 would be needed for a 2 percent raise, which is not included in the current proposal.

“If we give the schools $320,000 or if we give them $800,000, you have to add 35 percent more to that because 35 percent of all the school board money goes to Lenoir City,” Shaver said. “So the $800,000 would take about $1.1 million, and the $320,000 takes about $450,000 for the school board to actually realize what they’re requesting.”

County Commissioner David Meers commended Garren’s presentation.

“I think it’s probably the most challenging (budget) that I’ve seen and I think it’s all because of the COVID-19 with the economy,” Meers said. “We’re facing things that we’ve never faced before.”

Meers said the county should move forward with a “flat budget” for this year.

“I think a lot of counties are taking the position because you just don’t know how long it’s going to take to rebound,” he said. “... It’s going to be tough, but I will say this, I think the budget committee is trying to work diligently to provide good service for the citizens and it’s just tough economic times. A lot of people are losing jobs and homes, and I haven’t heard of anyone losing a home, thank goodness, but you don’t know what’s going to happen in the future.”

Cullen believes department heads have been understanding of the COVID-19 pandemic.

“They’ve been very good as a whole,” he said. “There’s a couple areas where we’re facing increases. I don’t know if it’s going to happen or not. The school’s asked for additional funds. There’s a couple requests in there for additional employees.”

Bradshaw said overall the budgeting process has been “smooth.”

“It’s really been smooth, no great big surprises,” he said. “All the department heads, elected officials have done a great job of recognizing where we’re at with this pandemic and so there’s no huge increases there. We’ve got a little bit more money budgeted than we did last year, but at the same time our revenue has been strong I think we’ll be able to accommodate.”