KINGSPORT — City Manager John Campbell is proposing a balanced budget for the next fiscal year with no property tax increase and a 2 percent pay raise for city employees. However, the proposed budget does call for small hikes in the water and sewer rates and the hiring of three part-time employees in the public works department.
Another item of note, Campbell’s proposed budget includes no decision on how much more money, if any, to give to the Kingsport City School system, which has requested an additional $2.4 million from the city to balance its budget — $520,000 of which would go toward the operational costs of the new STEM platform school.
Campbell presented his proposed fiscal year 2013 budget to the Board of Mayor and Aldermen during a special called worksession Tuesday afternoon. The BMA has discussed the city’s capital improvement plan and KCS budget at previous meetings.
Tuesday’s meeting included an overview of the city’s 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 budget) has been a tough process; tougher this year in some ways,” Campbell said.
Campbell’s proposed budget is 1.76 percent more than the current fiscal year and does not include a property tax increase. The last property tax hike took place in fiscal year 2006, a 10-cent hike with nearly all of the money going to KCS. The BMA has said they have no interest in raising property taxes this year.
Over the past year Kingsport has seen a 3 percent increase in property tax collections, but Campbell said all but around $100,000 was from annexed properties, mostly in the Colonial Heights community. Sales tax collection rose 7 percent over the previous year and Kingsport is projecting a 3.75 percent growth next fiscal year. The Regional Sales Tax (originally approved to fund the construction of MeadowView Conference Resort and Convention Center) is projected to grow by 3 percent next year for a total of $3.4 million.
Last month, Campbell presented the BMA with the city’s five-year Capital Improvement Plan — a list of projects and equipment purchases for the city, the school system and water and sewer departments. The proposed CIP includes $8.4 million in projects just for the general fund alone next fiscal year, but on Tuesday the only item from the list to be funded was street resurfacing work at $600,000
Budget Director Judy Smith said the CIP has not been finalized and would likely change before the BMA approves the budget.
“I realize that’s not a number the mayor and others have mentioned, but we could not find a place to come up to $1.2 million. I know we need to; we just couldn’t find it,” Campbell said.
Last week, KCS officials presented their proposed budget for the school system, asking city leaders for an additional $2.4 million, raising Kingsport’s maintenance of effort from $9.5 million to $11.9 or a 25 percent increase over the previous year.
School officials say the bulk of the increased funding would go to cover new initiatives, such as the Early College program and STEM platform school, the addition of 27 new positions within the system and salary increases for all employees.
Since the school system’s maintenance of effort request was so large, Campbell said he is not making a recommendation on how much more money to provide at this time. A meeting between city and school officials will likely take place within the next week.
Last week, Mayor Dennis Phillips indicated Campbell was recommending a $300,000 funding increase to KCS.
Campbell proposed budget calls for the hiring of three additional part-time positions in the Public Works department due to annexation. This would bring the total number of city employees up to 730. The budget also calls for a 2 percent pay raise for city employees (at a cost of $447,000) and the funding of step increases for eligible employees (at a cost of $438,000).
Water and sewer rates for customers inside the city limits will be going up 2 percent and 3 percent respectively. Customers outside the city limits will see their water rates go up 1 percent, but no increase on the sewer rate.
Public Works Director Ryan McReynolds said the additional funds raised by these increases would go to operational costs within the system. Campbell said Kingsport is working to have the lowest combined water/sewer rates in the area within the next three to five years. The average combined bill for city customers is around $50.
Other notable expenditures in the budget include the final $400,000 incentive payment for the Pavilion shopping center, a $197,000 TIF (tax increment financing) payment for East Stone Commons and the second of six $120,000 incentive payment for the Press Group development on the old Quebecor property.
The BMA is scheduled to hold another budget worksession at 4 p.m. on Thursday at City Hall. Kingsport’s fiscal year runs from July 1, 2012, through June 30, 2013, and the BMA is scheduled to vote to approve the budget at regular meetings on June 5 and June 19.