Rising costs could mean budget shortfall for Loudon County
LOUDON — Loudon County could face a massive property tax increase if all the projects currently under consideration are funded for the 2015-2016 budget year.
County leaders say it's too soon to know for sure.
Based on estimates that the commission budget committee is now working with, the county government could be facing a $3.9 million deficit, some observers said.
That shortfall doesn't include the school budget.
The school system could be facing a more than $2 million deficit to provide teachers with raises and to cover rising costs. Lenoir City will receive an additional 35% of the amount provided to the county schools.
Also on the table is a new jail and court complex with a cost estimated at between $10 million and $47 million. The jail is under a court order to reduce overcrowding, and a study committee has been reviewing funding options, including a property tax increase or a wheel tax.
An additional $320,000 will be needed to fund a second General Sessions Court judge approved by the county commission this week. Although an increase in the county's litigation tax from $17 to $68 has been discussed, there is currently no formal plan to fund the second judge.
Tellico Village resident Richard Anklin, a frequent speaker at commission meetings who holds a master's degree in finance, told commissioners early this week the budget numbers are beginning to look rather scary.
Even at the lowest estimates of projects now under discussion it could take at least a 25% increase in property taxes to square away the county budget, he said. Under those estimates property taxes might rise from the current rate of $1.85 to $2.35 for every $100 of 25% of the assessed value.
"Something has to give. Do they really need to fund all these things this year?" he asked.
Property taxes in Loudon County are paid from three primary sources, Anklin said. About one-third are paid by residents of Tellico Village, one-third by businesses and one-third by the other residents of the county. He said the more wealthy residents might be able to absorb such an increase, but average residents might not.
"I don't think any of these requests would stand if the taxpayer knew about them up front," he said.
Loudon County Mayor Buddy Bradshaw was elected in August on a platform that included controlling spending. He said it's too early to predict the size of the potential deficit or the need for a tax increase.
The numbers under discussion are at this point only estimates, he said. "Our budget director is very conservative in her numbers. We're better off than it looks," he said.
The county has other options to help balance the budget besides a tax increase, including the use of reserve funds, he said. All the departments will have to look more closely at their budgets before any determination of the need for a property tax increase. While the new jail could be a massive expense, there is no reason it has to be funded this year, he said.
The school budget will be the biggest challenge, he said.
The school system is struggling to keep its head above water after five years without an increase in state funding, according to board member Dr. Gary Ubben. Over the past few years the schools have drawn from reserves to balance the budget, he said.
Fixed costs such as utilities have risen with the construction of new and expanded school buildings. Other challenges include teacher retention and the need to improve performance on ACT tests, he said.
The increased expenses and 2% step raises for teachers account for a deficit of about $1.6 million. About $500,000 in additional funding would be needed to implement a teacher salary compression program, he said.
The program would bring teachers up to the highest salary levels within 20 years instead of the current 26 years. Teachers with five to 12 years of experience, the ones most vulnerable to being recruited by surrounding counties, would benefit the most from the increased step raises, Ubben said.