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Kingsport property tax hike an option as BMA deals with deficit

Matthew Lane • May 9, 2018 at 8:30 AM

KINGSPORT — Is the Board of Mayor and Aldermen going to raise property taxes to balance the city’s budget?

Probably not, but it’s definitely one of the options on the table as city leaders grapple with a $644,000 hole in their budget.

BUDGET TIME

Kingsport is in the midst of balancing the budget for the 2019 fiscal year, which begins on July 1. On Tuesday, the BMA heard budget presentations from Kingsport City Schools, the city’s public works department and from City Manager Jeff Fleming.

The issue at hand is Kingsport has to come up with an additional $644,000 in operating funds for the school system. Why? Because when Sullivan County shifted around the tax rates of several county funds last year to balance its budget, the result was $644,000 less to KCS.

State law says a school system cannot receive less operating money unless student population decreases. Meaning, Kingsport has to make up the difference.

To fill that gap, Fleming recommended a 20 percent reduction in funding for special programs ($98,400), to not fund some capital projects for one year ($339,722) and to cut One Kingsport funding by roughly a third ($245,000).

Special programs include such organizations as the Downtown Kingsport Association, Healthy Kingsport, Move to Kingsport and Keep Kingsport Beautiful. Of the capital projects being delayed, the most notable ones would be the Main Street rebuild and the extension of Martin Luther King Jr. Drive.

MULTIPLE OPTIONS

However, Fleming’s recommendation is not the only option on the table.

A second choice would be to raise property taxes by two cents, cut special programs by 10 percent, and not fund some capital projects for one year. This option does not cut the $700,000 budgeted for One Kingsport.

Finally, a third option available is a much simpler one: don’t cut anything and raise property taxes by four cents. For the average property owner, that’s $14 more a year on their tax bill.

The BMA will meet Wednesday at city hall at 3 p.m. to informally decide on which option to choose.

OTHER FACTS

— The general purpose school fund is increasing by roughly $300,000 next year, going from $76.4 million to $76.7 million. School officials arrived at this amount by making cuts, using some surplus money from the fund balance ($267,000), raising tuition rates and eliminating the driver’s education program.

— Kingsport is proposing an increase to the water and sewer rates. Three percent on water rates inside the city and three percent on sewer rates, for both inside and outside city customers.

— Kingsport’s general fund (the main operating fund of the city) is increasing by $1 million in 2019, going from roughly $80 million last year to $81 million next year. Sales tax collections have increased by $500,000 this year while property taxes have remained relatively flat.

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