|If you've lived in our community very long, it would be hard not to
notice all the new government facilities going up around Lenoir City. A
new 2 million dollar city hall, a new million dollar board of education
office, a new 43.5 million dollar LCUB office and pole yard and the
crowning jewel, a new 6.5 million dollar city events center.
Then I read in the most recent city news letter, "From The Desk Of The Mayor" the statement, "I'm proud to announce that our reserves are holding strong at 3.8 million dollars. I attribute this to conservative fiscal management of the governing body."
As a member of county government and a member of the budget committee, I know well, how hard it is for local government to make ends meet, much less have the money for major government building projects like Lenoir City has undertaken. So I think if I study up on how the city does it, I might learn ways for county government to better manage the limited resources we have.
So I start by looking over multiple years of the city's budgets and audits. This is the best source of raw numbers, facts and figures. It didn't take very long to realize the secret to their success, four letters, LCUB. The Lenoir City Utilities Board.
Most of the city's revenues come in like any typical government, property taxes, sales taxes, fines, fees, ETC. However, unlike most governments, Lenoir City has what you might call, an ace in the hole. The Lenoir City Utility Board, owned by Lenoir City, makes an annual payment to the city general fund. It's called In Lieu Of Tax. It's suppose to be based on the value of LCUB property located in the city, much like a typical property tax even though LCUB is a tax exempt organization.
Last year's payment to the city was $2,945,366.00 and the previous year it was $2,858,039 according to their audit reports. Their total general fund budget each of the last two years was a little more than nine million dollars. So a good third of their general fund operating budget comes from LCUB rate payers. Year after year, the city general fund looses money but that loss is made up with the LCUB In Lieu Of Tax payment.
Without the LCUB money, Lenoir City government would have to really, really cut back on their spending or would have to raise property taxes so high, few could afford to live in the city.
Let me make it very clear, Lenoir City government is not nor has done anything wrong. In fact, using rate payer money to support the city is totally legal. Not required but allowed by state law. Loudon City does the same thing just on a much smaller scale.
Lenoir City government is really three different components, the utilities, city government and education. The utilities is of course the big one with $171,000,000.00 in revenues last year. The school board had about $18.6 million in revenues with the city taking in about $6.8 million. Clearly the utilities and the schools have have great revenues and when you add the LCUB money to the city funds, they're doing pretty good too.
Then there's the debt. Combined debt for all three entities is about $56 million dollars. The utilities have about 39 million, the schools have about $9.1 million and the city has about $7.7 million of debt. This does not include the anticipated additional debt of $30-40 million dollars for the new LCUB facilities.
Each department will be paying for their part of the new buildings. The school board will be paying for the new million dollar school board central office down town. The city will be paying for the new $2 million city hall and the $6.8 million dollar events center and LCUB will be paying for their new $43.5 million dollar administrative complex.
Obviously, LCUB rate payers are picking up the tab for much of the city operations and according to some city officials, that's OK. They feel that the fact that city officials had the foresight and wisdom many, many years ago to take electricity to west Knoxville when the Knoxville Utilities Board, KUB, would not, was a smart move, and I think we would all agree with that. After all, 75-80% of LCUB's electric customers are in Knox County. So essentially, Knox County citizens are paying for a lot of Lenoir City operations.
I don't think as the mayor said, "our reserves are holding strong at 3.8 million dollars. I attribute this to conservative fiscal management of the governing body" is quite right. I think it's more about LCUB rate payers supplementing city government.
So, if you are like me and wondered how a little city does all the big things they do, there it is. I guess it's too late for the county to get into the electric business.
But you can't help but wonder, if the city and utilities didn't spend so much money, would my utility bill be lower? Guess we'll never know.