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Mount Carmel faces drastic cuts or a 68 cent property tax hike

Jeff Bobo • May 12, 2018 at 8:30 AM

MOUNT CARMEL — Facing a $548,000 deficit in the proposed 2018-19 budget, the Board of Mayor and Aldermen during Thursday’s budget workshop was presented with two difficult options, one of which includes about 10 layoffs and closing multiple departments.

Or the BMA could balance the budget by raising the property tax rate by 68 cents, from $1.38 to $2.06. For a home valued at $100,000, that 68 cent hike would increase the annual city property tax bill by $170.

That’s an option no one on the BMA wanted to consider yet, and board members started this week’s meeting by trimming line items.

City Recorder Marian Sandidge pointed out that they will never balance the budget by “dollaring it to death.”

What’s the alternative to raising taxes?

Sandidge presented the BMA with a summary of the substantial level of cuts it would take to balance the 2018-19 budget with no new revenue.

Among those cuts would be closing the library, post office and animal control programs; withdrawing from the joint parks and recreation board with Church Hill and Surgoinsville; and laying off police and public works employees.

She even had the city cutting out the annual Christmas parade.

“We’re either going to have to cut, or we’re going to have to find the revenue,” Sandidge said. “I know people hate to hear that, but I would challenge anyone to show me how you can run government without tax revenue. It’s not possible.”

How did Mount Carmel get to this point?

Mount Carmel has $3 million in savings, which includes $1 million that must be kept in reserve. City Manager Mike Housewright noted that if the city continues using savings to balance the budget at this year’s pace, those savings will be depleted in two more fiscal years.

Last year, Mount Carmel balanced its budget by using about $500,000 in savings. The BMA then rejected the AEP franchise fee which it had already budgeted in 2017-18 as producing $175,000 in revenue.

That added to the current deficit, as did the loss of speed photo enforcement, which was budgeted to generate $175,000. Factor in an increase in health insurance, the addition of a city manager position and other routine cost increases, and the projected 2018-19 deficit was more than $800,000 as of last month.

The only spot of good news at Thursday’s budget workshop was that staff had found enough cuts to reduce that deficit to $548,000.

The biggest reductions were shifting $120,000 for paving from the general fund to the state street aid revenue fund, moving a public works salary from the general fund to the sewer department and eliminating the city recorder salary after December when she retires.

City’s economy is stagnant

Mount Carmel’s property tax revenue increased only $7,000 over the past year.

Housewright noted that the current financial crisis can be blamed partly on the fact that the town’s revenue has been stagnant for the past decade.

In 2007, the city brought in $2.23 million. In the current fiscal year, it is projected to bring in $2.39 million.

Meanwhile, the cost of everything has continued to rise, especially health insurance. Employees have received step raises and cost of living bumps.

That lack of growth is partly due to very little housing being constructed in Mount Carmel, combined with a very small growth in commercial and retail sales.

With only one side of Main Street available for commercial growth, and that growth hampered by the proximity of the railroad tracks, there’s almost nowhere in town for new sales-tax-generating businesses to locate.

Cuts to balance the budget with no tax increase:

Post office: Laying off two employees and not replacing the retiring city recorder would save $115,447.

Police department: Laying off two full-time officers, leaving only three full-timers and one chief, would save $84,930.

Animal control: Closing the department and laying off one person would save $79,860.

Public library: Closing the library would save $64,990.

Parks and recreation: Withdrawing from the joint recreation board with Church Hill and Surgoinsville and cutting all park development would save $113,000.

Senior center: Cutting the city’s annual contribution would save $36,000.

Public works: Laying off one employee would save $34,352.

Fire department: Cutting volunteer incentive pay and the Christmas parade would save $13,500.

What now?

Vice Mayor Carl Wolfe said if the BMA cuts everything on Sandidge’s list, “people in this town are going to raise the devil.”

He added, “Everyone wants the senior center, and I’m one of them myself, and years ago they talked about (closing) the post office. Everybody wanted the post office. Everything here (on Sandidge’s cut list) is clearly what we need. You don’t want to close the library, and you’ve got to have police protection.”

Mayor Chris Jones asked Housewright and Sandidge to come back to next Thursday’s workshop with recommendations on partial cuts with a smaller tax increase.


 

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