Loudon holds current tax rate, cuts budget

Vicky Newman-News Herald

The City of Loudon's existing tax rate of less than $1.03 per $100 assessed valuation will not increase this year, despite dissent among council members about possible 2011-12 budget shortfalls.

A 3-cent tax increase proposed by City Manager Lynn Mills - to $1.06 - was rejected by council members.
Initial discussions Monday, during the regular council meeting, centered around a possible 5-cent increase. Councilman Mike Cartwright said Loudon's tax rate is well below the rate of surrounding counties, and he felt a higher rate should be set to offset future funding shortfalls.
"Kingston's rate is $1.08. Sweetwater's is $1.14; Knox's is highest at $2.46, and Oak Ridge's is $2.34," Cartrwright said. "I think we should set our rate at $1.08. We could use the 2 extra cents. We were lucky to get a grant for our ladder truck, but we have three fire trucks 15 years old that are going to need to be replaced. We need to upgrade our public works department. I would rather pay down our debt service. ...I'd rather save and pay than borrow and pay interest. ...We would save money in the long run."

With the tax increase, Cartwright said he would not support garbage pickup fees. For a small tax increase, he noted, city residents could avoid an additional $10 monthly fee, the equivalent of  $120 a year.

Mayor Judy Keller pointed out again that new state laws regarding long-term debt will require that a revenue source will be needed for purchasing needed equipment in the future.

However, the motion by Cartwright to increase the tax rate to $1.08, failed for lack of a second. Keller asked for discussion or a motion on the proposed 3-cent increase. When she garnered no response, Ed Arnold, city attorney, suggested that she pass the gavel to Lynn Millsaps, vice mayor, so that she could make a motion. Under the city charter, the mayor can vote but cannot introduce motions.

Keller exchanged seats with Millsaps and then introduced a motion to set the tax rate at $1.06. Her motion also failed for lack of a second. Council members sat quietly.

Mills said the longer council members avoid incremental tax increases, the more likely large increases will be needed in the future. "You'll have to bear the brunt of a large increase," he said. "Smaller increases are a greater beneficial effect."

Keller said, "There's a good chance next year we will have to ask for 8-cents tax raise."

Millsaps noted that the budget includes a $1.369 million unencumbered fund balance, an amount that Mills said is recommended for carryover by the state, 20 percent of the total budget amount.

Mills said a budget and tax rate must be approved by Sept. 1 so that tax bills could be mailed in time.

The budgeting process had been on hold since the council learned that industry tax challenges potentially could result in funding shortfalls of more than $200,000.

The board eventually approved a motion on second reading that council members originally supported. Voting in favor of the motion were Millsaps, Jones and Parks. Keller and Cartwright voted no.

The earlier motion that had been approved on first reading two months ago, to maintain the existing tax rate $1.0287. While the tax rate is final on second reading, Mills will be going back to the budget to find where reductions are possible. A pay classification plan that had been included on the agenda for approval was postponed.

Millsaps spoke up, "The employees will get their raises," he said. "And there won't be layoffs," Parks added.

A special called meeting was scheduled for Sept. 1 at 7:30 p.m. to address the budget cuts. A bridge lighting ceremony will follow the meeting at 8:30 p.m.