Loudon Tax Increase?

City of Loudon: Cut Services Or Raise Taxes Only Option

Vicky Newman-News Herald

The Loudon City Council will have two budget/tax resolutions prepared to consider during its August meeting -- one including a tax increase of 3 cents, for a total city tax of about $1.06; another that includes not tax increase, a tax of slightly more than $1,0287.
Lynn Mills, Loudon City Manager, told city council members Monday that the board could no longer delay adopting a budget for the current fiscal year.  Mills said the board need to take action soon.
"We have to take the bull my the horns...We need to get these tax bills out," Mills said.  "It could be a year or more before we know what the final outcome will be.  We may not know at budget time next year."
The issue of revenues has plagued the city for months.  Council delayed budget adoption in June, and has operated under the previous year's budget, as it waited to learn what would happen with revenues.  However, the tax rate to fund the budget must be set before September.
Mills recommended during Monday's workshop meeting that the council increase taxes.
"We need to deal with the additional loss," Mills said.  "Our options are to cut costs, with reductions in each department, to the detriment of services, or a tax increase."
Mills said each department already had been directed to keep budget costs as low as possible, and any reduction of services in fire and police would be detrimental.  The fire department could lose its fire insurance rating, meaning insurance costs would rise.
The city's budget is about $6.35 million.  Mills said each penny of tax raises about $31,300--and increase of 3 cents would raise $93,900.
The anticipated fund balance (carryover) is $1.6 million at the end of 2011, but Mills said the Municipal Technical Assistance Service (MTAS) recommends a fund balance of 15 percent.
Councilman Lynn Millsaps said he thought the city should look at cutting spending before increasing the tax.  Councilman Jimmy Parks suggested cutting garbage pickup back to one day a week.
Mills replied, "That would mean picking up the same amount in one day.  It would just take longer and they'd work harder ... I don't think we would gain anything.  People would complain."
Mayor Judy Keller said she thought people would complain more about loss of service than the slightly higher taxes.  "People complain when park bathrooms don't work...people want a safe place to live, and a 3-cent tax rate is not that large."
Keller also said she had looked at all city departments and felt they were financially responsible.  "We're in a situation that's controlled by industry and state mandates," Keller said.  "I don't see that we have more options."
Councilman Jimmy Parks said if taxes are raised, he opposes implement garbage fees.  "If we go up on taxes,  I won't vote for charging to pick up trash--no way," he said.
Keller said the state is requiring fiscal responsibility.  As part of that, municipalities will not be allowed to purchase equipment with five-year warranties and take 20 years to pay."
Mills said, "A tax of $1.06 for the services we provide--I would put that (rate) up against anybody's."
The city has had tax rates in the past of up to $1.11 per hundred dollars of assessed property, and lowered the rate when possible.
A decision must come soon, Mills said.  If the additional funds are not required, the city can always rescind the additional amount, but the city cannot legally allow expenditures to exceed revenues, he said.
"We are in a quandary," Mills said.
The council meets again Monday, Aug 15.  If the resolution approving a tax rate of $1.06 is passed on first reading, a special-called meeting, will be required Sept. 1, for public hearing and passage on second reading.  If the option of keeping the existing tax rate is chosen, the resolution was approved on first reading and a public hearing was held June 20.