City of Loudon may delay budget adoption

Vicky Newman News-Herald

A proposed budget ordinance adopted on first reading May 16 by Loudon City Council may be getting another look and more thorough consideration by the board before final adoption and a tax rate is set. In fact, final budget adoption and adoption of a tax rate to fund the budget, originally expected to take place June 20, could be delayed until September.

Council members, in a workshop meeting Tuesday, June 14, said they are reluctant to adopt a budget when the revenue side of the equation remains an unknown. Lynn Mills, city manager, informed the council the property appraisal figures for the city likely would be significantly reduced from the original proposed budget's expected revenues. Revenues are based on assessed values.

The initial budget for fiscal year 2011-12 was about $6.35 million in revenues and expenditures, including an across-the-board salary increase of 2 percent for city employees, and reflected an ending fund balance (2010-11) of about $200,000 more than had been projected.

Actual numbers were not available as early as usual this year, and as was expected because an unusually high number of Loudon County property owners appealed their appraisals. For Loudon, the two largest to appeal, industries Tate & Lyle and Kimberly-Clark, could have a significant impact on revenues this year.

Council member Lynn Millsaps said the uncertainty made him uncomfortable. "I don't think I can vote for a budget if we don't have a tax rate," Millsaps said. "We might not have enough money in the budget..."

Mills said the Council could delay adoption of a new budget for a time by approving a continuing resolution. "The deadline for us would be a September time-frame, because we need to mail out property tax bills.

"We can operate under the existing budget until then," Mills said. "There's $54,000 we know is coming down (decreased revenues) in the budget. Any decrease in the budget will have to be taken out of the fund balance, or we could decrease expenditures to get us savings to equal what we are losing in revenues, or we would have to have a tax increase. Those are the only options we have that I am aware of."

Mills told council members that he expected the equalization process to involve a compromise on most appealed properties, with officials reaching an appraised value somewhere between the county's and property owners' estimates of their value.

However, he said "the two big ones," Tate & Lyle and Kimberly Clark, may choose to appeal the Equalization Board's decision. An appeal would mean further delays in having true numbers.

Mayor Judy Keller said, "I hope this doesn't throw us into a tax increase just to provide services."

Millsaps said, "If there's less money, that means a tax increase for the county."

The Loudon County Board of Equalization concluded a week of appeal hearings Friday, June 10, and the two industries came into the process on the last day. It took most of the following week to get final  numbers.

Chuck Jenkins, property assessor, said in response to appeals filed by Tate & Lyle and Kimberly Clark before the County Board of Equalization, the board "approved partial reductions to the extent that were deemed warranted.

"The appellants have until Aug. 1 to decide whether to accept the Board's decision or to elevate their appeal to the state level," Jenkins said. "Should they choose the latter, we will make every effort to vigorously defend our current valuations and protect the financial interests of the city and county."

Jenkins said the total property valuation numbers did reflect a significant reduction to the entire county, "Of course, that (difference) was disproportionately so for the city of Loudon," Jenkins said.

Before the appeals were heard, the total assessment for Loudon County stood at $1,726,317,005 (about 1.726 billion). After the appeals, total county assessment is $1,711,131,722 (about 1.712 billion), a reduction of $14,706,430 million, or 0.8 percent.

The city of Loudon's total assessments before appeals, stood at $320,551,807 ($320.6 million). After appeals, the number is $307,956,625 (about $308 million), a reduction of 3.9 percent.

Countywide reappraisal comes in 2013.