However, the budget does not include all of the funds discussed for KCS and runs counter to a BMA pledge where any new debt issued next fiscal year would not exceed the amount of debt rolling off at the end of the current fiscal year.
The BMA voted unanimously during its regular meeting Tuesday night to approve the 2014 budget on second reading. By city charter, the BMA must approve a budget on two readings by June 30. The fiscal year runs from July 1 to June 30.
Kingsport’s overall budget is composed of several independent budgets, such as the general fund (administration, police, fire, and parks and recreation), water and sewer funds, and small miscellaneous funds such as solid waste, fleet and risk management. The school system operates under a separate budget, but receives about $10 million from the city’s general fund.
Initially, Kingsport City Schools had requested an additional $1.8 million in “maintenance of effort” operating funds from the city, money school officials say the system needs just to maintain the current level of service.
Throughout the budget process, city officials worked under the assumption of no increase to KCS next year, but last month Mayor Dennis Phillips indicated the school system would receive some increase next year.
Two weeks ago, the BMA agreed to allocate $250,000 in new operating funds to KCS, money originally allocated for street resurfacing. During the budget process, street resurfacing went from $600,000 next year to $1 million to the current level of $750,000.
In addition, the BMA has pledged an additional $200,000 to the school system contingent upon future growth in property tax collections. However, according to a city finance official that $200,000 is not technically in the city’s budget. KCS did include the $200,000 to balance its budget.
And speaking of pledges, the proposed capital improvement plan for next year exceeds the amount of debt the BMA originally pledged to maintain or stay under. The BMA has said the amount of general fund debt issued next fiscal year should not exceed the amount rolling off the books at the end of the current fiscal year.
Kingsport has $6.76 million in debt rolling off in FY14 and $6.98 million rolling off in FY15. Originally, City Manager John Campbell proposed a general fund CIP hitting that goal, but it did not include any capital funds for the school system or the remaining $1.7 million to complete the J. Fred Johnson Stadium improvements.
Over the past month, Campbell has proposed a general fund CIP for next year of approximately $10.4 million, which would include the stadium funds and money for the school system.
By Monday, the proposed general fund CIP had grown to just over $13.7 million for 2014 — more than double what’s rolling off the general fund in 2014 and 2015.
While a few items on the CIP have seen its funding tweaked a little, the bulk of the increase comes from a $3.5 million earmark for the construction of a new softball and baseball complex for Eastman Chemical Company.
When Eastman announced its $1.6 billion “Project Inspire” last month, included was a list of community improvements the company would like to see happen with the additional tax revenues coming from the project. Eastman plans to build a new office building on the site of its existing ballfields on Wilcox Drive and would obviously need a replacement complex.
During a BMA worksession Monday afternoon, city leaders discussed why the $3.5 million was added to the CIP.
“The reason was in response to the great announcement last month about Eastman’s future and how part of their site would be affected,” Campbell said. “We felt like it was important to put that in front of you, to get the best estimate for the land cost and type of facility you’d like to have.”
Phillips said when the BMA made its pledge, the city had no idea about Eastman’s announcement.
“Everyone on the BMA knows the importance of the softball and baseball fields. If we don’t do this, we’re taking away a lot of recreation facilities we’ve had for many years,” Phillips said. “Not doing the ballfields is not an option.”
Alderman Mike McIntire said the city has some hard choices going forward about what it spends money on.
“When we borrow that much and have that much floating, we’re going to squeeze the general fund budget where we won’t have enough to buy a T-shirt for someone,” McIntire said.
The 2014 budget adds just over $28 million in debt, but includes $11 million in debt service payments, resulting in total city debt rising from $211 million to $228 million.
Other budget highlights include:
An allocation of $1.2 million in capital funds for KCS next fiscal year and $2.2 million in fiscal year 2015. The school system originally asked for $2.88 million in CIP funds for FY14 and $12.7 million for FY15.
An increase in the water and sewer rates of three percent each, for all customers. For the average user in the city, the rate increases will equate to an additional $1.08 on the bill; for the average user outside the city, the amount will be $1.73.
The addition of two new positions in the public works department and four new positions in the storm water utility. Originally, Campbell proposed adding six new positions under the general fund and the four in the storm water utility.
Delaying pay raises of 1.5 percent for all city and school system employees to January 1; step increases will take effect July 1. The move freed up approximately $400,000 within the budget.
A one-time allocation of $10,000 to the Second Harvest Food Bank of Northeast Tennessee.