The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That's a shift from last year, when riskier subprime loans drove the housing crisis.

The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.

The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising. Lost jobs are the main reason homeowners are falling behind on their mortgages.

After three years of plunging prices, the housing market started to rebound this summer. That lifted hopes for the overall economy. But analysts say there are too many foreclosed homes that have yet to be dumped on the market and expect further price declines.

Among states, the worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.

One in four mortgages in Florida were either past due or in foreclosure, the most in the U.S. Nevada was close behind at 23 percent.

"There's no indication in this data that foreclosures are going to abate anytime soon," said Mark Zandi, chief economist at Moody's Economy.com, who projects that nationwide home prices will fall up to 10 percent before bottoming next fall.

Driven by rising unemployment, prime fixed-rate loans to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.

Many laid-off homeowners might be able to survive on their savings for a while, but "the longer the economic situation stays in place, the less likely they are to hold on," said Jay Brinkmann, chief economist at the Mortgage Bankers Association.

In markets where foreclosures already are high and still rising, prices likely will remain soft. That will cause developers to keep their bulldozers idle and prevent the industry from making a big contribution to the economy's recovery.

"Builders only start homes when they can make money," said John Burns, an Irvine, Calif.-based real estate consultant. "In a lot of areas, until prices go back up, construction doesn't make any sense."

The crisis has struck people like Betty Wilson of San Diego. She was laid off a year ago from her job at an insurance company.

Since then, Wilson has managed to pay her $1,090 mortgage bill from collecting unemployment benefits, renting out a room and dipping into savings. But money is running low. She fears she won't make her payment for December.

Wilson, 56, said she has tried to get her mortgage company, GMAC Mortgage, to lower her 6.25 percent interest rate or give her a temporary break from payments. Many mortgage companies will let a borrower skip up to six months of payments, though they require that the money be paid back eventually.

After The Associated Press inquired about her case, a GMAC spokeswoman said Thursday that the company would offer Wilson reduced payments for four months, "while we continue to review her financials for a permanent solution."

After a typical recession, foreclosures peak about six months after the unemployment rate does. But the process could take longer this time, in part because loan-modification programs and new state laws have prolonged the process. Unemployment, now at 10.2 percent, isn't expected to peak until next spring or summer.

Another unknown is the effectiveness of the Obama administration plan to attack the foreclosure crisis. As of last month, about 20 percent of eligible borrowers, or more than 650,000 people, had signed up. But most of those enrolled have been chosen for trials lasting up to five months.

About 4 million homeowners were either in foreclosure or at least three months behind on their mortgage payments as of September, according to the mortgage bankers group. Even if some of them manage to stay in their homes, the market is likely to absorb a wave of new foreclosures. Those properties are concentrated in states like Florida and other already beleaguered areas.

Subprime loans with adjustable rates have fallen to 16 percent of new foreclosures, from 35 percent a year earlier. Loans backed by the Federal Housing Administration also show rising signs of trouble. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure.

The Mortgage Bankers Association's quarterly survey of 44.6 million loans is considered the most authoritative report on mortgage delinquencies. A separate report, issued monthly by foreclosure listing service RealtyTrac Inc., is based on courthouse filings.

County and city unemployment data for Tennessee is scheduled for release on Nov. 25.

Tri-Cities Regional Airport Marketing and Air Service Development Director Melissa Thomas said, we had a few delays this morning on Delta. The 11:19 scheduled arrival for Delta just got in, so the 11:44 departure is also delayed. But that is it so far.

FAA spokeswoman Kathleen Bergen said she doesn't know how many flights are being affected or when the problem will be resolved.

Another FAA spokesperson, Paul Takemoto, said the problem started between 5:15 a.m. and 5:30 a.m. EST. The outage is affecting mostly flight plans but also traffic management, such as ground stops and ground delays, he said.

Regarding flight plans, airplane dispatchers are now sending plans to controllers and controllers in turn are entering them into computers manually, he said.

"It's slowing everything down. We don't know yet what the impact on delays will be," Takemoto said.

An AirTran Airways spokesman said there's no danger to flights in the air, and flights are still taking off and landing.

However, spokesman Christopher White said flight plans are having to be loaded manually because of a malfunction with the automated system.

"Everything is safe in the air," White said.

Hartsfield-Jackson Atlanta International Airport, the world's busiest airport, has been particularly affected.

AirTran had canceled 22 flights and dozens more flights were delayed as of 8 a.m. EST. Delta Air Lines also has been affected.

The FAA said in a statement that it is having a problem processing flight plan information.

"We are investigating the cause of the problem," the agency said. "We are processing flight plans manually and expect some delays. We have radar coverage and communications with planes."

"

Uncertainty over whether a homebuyer tax credit would be extended weighed down construction last month — a sign of how much the fledgling recovery depends on government support.

Home building unexpectedly plunged to its lowest point since April, the Commerce Department said Wednesday. The figures show that builders fear there aren't enough buyers to soak up the glut of unsold homes already on the market — a supply magnified by record-high foreclosures.

Congress renewed the homebuyer tax credit earlier this month and broadened its reach. But even with government aid, the weakness of the housing sector is dragging on the economy.

"It will take a while before residential construction begins to contribute meaningfully to growth," Jennifer Lee, an economist at BMO Capital Markets, wrote in a research note.

The tepid recovery is also holding down inflation. While consumer prices edged up faster than expected in October, they remain lower than they were a year ago. And inflation is expected to stay subdued.

The Labor Department said consumer prices rose 0.3 percent in October, a bit more than the 0.2 percent economists had expected. Core inflation, which excludes energy and food, rose 0.2 percent, compared with expectations for a 0.1 percent rise.

The higher figure was driven by another increase in energy prices and the biggest jump in new-car prices in 28 years. The prices of used cars and trucks also rose by the most since September 1980. Together, new- and used-car prices accounted for 90 percent of the increase in core inflation last month, government analysts said.

Analysts said the jump in used-car prices was due partly to the government's Cash for Clunkers rebate program. The program reduced the stockpile of used vehicles. This happened because cars that qualified for the clunkers program were junked and so weren't available for resale.

The clunkers program also drove up new-car prices, analysts said. It helped reduce the supply of new cars just as the latest model-year vehicles, which typically carry a premium, were arriving in showrooms.

"The Cash for Clunkers program may have wiped out the '09 models that have been sitting there, but the brand-new 2010 models come, and they can command a higher price for those," said James Brock, an economist at Miami University in Oxford, Ohio, who studies the auto industry.

On Wall Street, stocks edged down after the unexpected drop in home construction and disappointing forecasts from technology companies. The modest drop came a day after major stock indicators closed at 13-month highs, including the Dow Jones industrial average, which has risen nine of the past 10 days. The Dow lost more than 32 points in afternoon trading Wednesday, and broader indexes also dipped.

The report on home construction said building of homes and apartments fell 10.6 percent in October to a seasonally adjusted annual rate of 529,000, from an upwardly revised 592,000 in September. Economists polled by Thomson Reuters had expected a pace of 600,000.

"There has not has not been much improvement in the underlying demand for new and existing homes," said Mark Vitner, senior economist with Wells Fargo Securities. "That's a warning for 2010."

So is a decline in applications for building permits — a gauge of future activity. Applications fell 4 percent to an annual rate of 552,000 units. That was the lowest since May and missed analysts' expectations of 580,000. Still, applications for single-family homes fell only 0.2 percent.

The National Association of Home Builders said this week that its housing market index remained unchanged in November, reflecting a cautious outlook from home builders. The trade association said its index stood at 17 for the second straight month; readings below 50 indicate negative sentiment.

Developers, facing weak demand and competition from low-priced foreclosures, have scaled back sharply. The number of homes under construction last month fell 3.4 percent to 560,000, the lowest on records dating to 1970.

With construction levels low, however, the inventory of unsold homes has been dropping. At September's sales pace, it would take about 7.5 months to sell off all the new homes on the market. That's down from a peak of 11 months last fall. But it's still short of a healthy level of around a six-month supply.

"It's still not a great market," said Brad Hunter, chief economist with Metrostudy, a real estate research firm. "But it's not as bad as it was six months ago."

People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. First-time homebuyers qualify for up to $8,000. To qualify, buyers must sign a purchase agreement by April 30.

Since the tax credit was extended earlier this month, Beazer Homes USA Inc. and other builders have said they're gearing up to buy land in some markets, citing expectations that sales will improve next year.

Foreclosures, though, remain sky-high. And many experts predict a new wave starting next spring. More than 332,000 households, or one in every 385 U.S. homes, received a foreclosure-related notice in October, according to RealtyTrac Inc.

Those trends are weighing on the economic rebound.

In an interview with Fox News on Wednesday, President Barack Obama said he's worried that spending too much government money to help revive the economy could undermine a fragile U.S. recovery and cause a double-dip recession. That occurs when the economy begins to recover briefly from a recession only to be dragged back under.

Obama said his administration is considering tax breaks that could encourage businesses to begin hiring again. But he added that if the nation keeps adding to deficit spending through tax cuts or more stimulus spending, people could lose confidence in the U.S. economy, and that could "lead to a double-dip recession."

Kingsport-based Eastman Chemical Co. might be a partner in a possible locally developed biofuels facility that would make ethanol from switchgrass, state Rep. Tony Shipley said Wednesday.

Shipley made the disclosure during a Joint Fiscal Review Committee meeting on Capitol Hill to approve an amendment in a $70 million contract allocation made by lawmakers to the University of Tennessee Biofuels Initiative.

“I have had calls from Eastman to verify they are interested (in biofuels technology),” Shipley, R-Kingsport, told the committee.

“We’ve been working with them for well over a year on this project and how they can incorporate the use of biomass into generating the energy they need for their products,” UT Executive Vice President David Millhorn said of talks with Eastman.

When asked for a response to Shipley’s disclosure, Eastman Corporate Communications spokeswoman Wanda Valentine said in an e-mail: “Eastman is supportive of efforts that lead to emissions reductions, improved energy efficiency and the deployment of technologies that support these goals. Public and private investments that provide incentives for technologies and innovation are needed. If there is an opportunity that fits within the company’s business plan, we will evaluate and pursue if appropriate.”

The biofuels initiative began moving forward when UT and its partner, Illinois- based DuPont-Danisco Cellulosic Ethanol (DDCE), broke ground in October 2008 on a pilot plant in Vonore, Tenn. That plant, scheduled to begin operation in about 25 days, will use switchgrass and corn cobs as feedstock in producing ethanol.

DDCE Vice President Vonnie Estes told the Joint Fiscal Review Committee that the company’s business model is to license the technology and sell it. The plan, she added, is to also build two other ethanol plants: One in the Midwest and the other in Tennessee.

The plant would cost more than $150 million and employ over 760 people to build it, said Kelly Tiller, director of external operations for UT’s Office of Bioenergy Programs and president and CEO of Genera Energy.

Over a 10-county region, Tiller added the facility would have a $59 million annual impact and support more than 180 workers.

According to UT’s Biofuels Initiative, switchgrass farmers will likely need to be located 30 to 50 miles from the ethanol plant. The initiative said switchgrass can yield about 500 gallons of ethanol per acre.

But, in a fact sheet, the initiative also noted “the market for switchgrass as an energy crop remains limited.”

Estes said DDCE has invested $70 million over three years to develop the ethanol production technology.

Still, lawmakers on the committee noted UT has done a poor job communicating changes in the initiative since it was first announced.

State Sen. Doug Jackson, D-Dickson, wanted assurances DDCE wouldn’t take the technology and use it to create jobs elsewhere.

“We’re putting public money into research,” Jackson pointed out.

Estes suggested ethanol could be competitive with gasoline by 2015.

Shipley insisted ethanol development competing with foreign oil is a good thing.

“I think it needs to be made abundantly clear to the people of Tennessee that what we’re really doing here is not just about Tennessee, it’s about national security,” said Shipley, a retired Air Force officer. “History is replete with stories that nations that don’t have control of their own supply of energy don’t long survive. ... It is appropriate for government to step up to the plate and prime the pump.”

Genera Energy was established as a for-profit limited liability company by the University of Tennessee Research Foundation as the vehicle to carry out the biofuels initiative.

DDCE was formed last year as a joint venture of international chemical company DuPont and Danisco’s Genencor division.

Construction of homes unexpectedly plunged last month to its lowest point since April, the Commerce Department said Wednesday. The weak figures show that builders fear there aren't enough buyers to soak up the glut of unsold homes already on the market - a supply magnified by record-high foreclosures.

They also illustrate how much the fledgling recovery depends on government aid. Builders held back in part because of uncertainty in October about whether Congress would extend a tax credit for homebuyers. Earlier this month, lawmakers renewed the credit and extended it to more buyers.

Even with government support, the weakness of the housing sector is dragging on the economy.

"It will take a while before residential construction begins to contribute meaningfully to growth," Jennifer Lee, an economist at BMO Capital Markets, wrote in a research note.

The tepid recovery is also holding down inflation. While consumer prices edged up faster than expected in October, they remain lower than they were a year ago. And inflation is expected to stay subdued.

The Labor Department said consumer prices rose 0.3 percent in October, a bit more than the 0.2 percent economists had expected. Core inflation, which excludes energy and food, rose 0.2 percent, compared with expectations for a 0.1 percent rise.

The higher figure was driven by another increase in energy prices and the biggest jump in new car prices in 28 years. The price of used cars and trucks also rose by the most since September 1980.

Analysts said the jump in used car prices partially reflected the government's Cash for Clunkers rebate program. The program reduced the stockpile of used vehicles. This happened because cars that qualified for the clunkers program were junked and so weren't available for resale.

The rise in both new and used car prices accounted for 90 percent of the increase in core inflation last month, government analysts said.

On Wall Street, stocks edged down after the unexpected drop in home construction and disappointing forecasts from technology companies. The modest drop came a day after major stock indicators closed at 13-month highs, including the Dow Jones industrial average, which has risen nine of the past 10 days. The Dow lost more than 55 points in afternoon trading Wednesday, and broader indexes also dipped.

The report on home construction said building of homes and apartments fell 10.6 percent in October to a seasonally adjusted annual rate of 529,000, from an upwardly revised 592,000 in September. Economists polled by Thomson Reuters had expected a pace of 600,000.

"There has not has not been much improvement in the underlying demand for new and existing homes," said Mark Vitner, senior economist with Wells Fargo Securities. "That's a warning for 2010."

So is a decline in applications for building permits - a gauge of future activity. Applications fell 4 percent to an annual rate of 552,000 units. That was the lowest since May and missed analysts' expectations of 580,000. Still, applications for single-family homes fell only 0.2 percent.

The National Association of Home Builders said this week that its housing market index remained unchanged in November. It reflected a cautious outlook from residential developers.

The trade association said its index stood at 17 for the second straight month. Index readings below 50 indicate negative sentiment about the market.

Buyers who have owned their current homes for at least five years are now eligible for tax credits of up to $6,500, while first-time homebuyers would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30.

Developers, faced with weak demand and competition from bargain-priced foreclosures, have scaled back sharply. The number of homes under construction last month fell 3.4 percent to 560,000, the lowest on records dating to 1970.

With construction levels low, however, the inventory of unsold homes has been dropping. At September's sales pace, it would take about 7.5 months to sell off all the new homes on the market. That's down from a peak of 11 months last fall. But it's still short of a healthy level of around a six-month supply.

"It's still not a great market," said Brad Hunter, chief economist with Metrostudy, a real estate research firm. "But it's not as bad as it was six months ago."

And in the weeks since the tax credit was extended, Beazer Homes USA Inc. and other builders have said they're gearing up to buy land in some markets, citing expectations that sales will improve next year.

Foreclosures, though, remain sky-high. And many experts predict a new wave starting next spring. More than 332,000 households, or one in every 385 U.S. homes, received a foreclosure-related notice in October, according to RealtyTrac Inc.

Those trends are weighing on the economic rebound.

In an interview Wednesday, President Barack Obama said he's worried that spending too much government money to help revive the economy could undermine a fragile U.S. recovery and cause a double-dip recession. That occurs when the economy begins to recover briefly from a recession only to be dragged back under.

Obama told Fox News that his administration is weighing tax breaks that could encourage businesses to begin hiring again.

But he added that if the nation keeps adding to deficit spending through tax cuts or more stimulus spending, people could lose confidence in the U.S. economy, and that could "lead to a double-dip recession."

Eastman CEO Jim Rogers notified employees by internal memo Tuesday that employee pay cuts will be reversed in less than three weeks. The cuts were implemented as of April 1 to help the company reduce expenses during the global recession.

“This year, we’ve had to make some hard decisions which affected our business and our personal lives. We’ve seen the slowdown of some growth projects, reorganization, reassignments, a 5 percent pay reduction, and more. It’s been a tough year, but we’ve pulled together to make the best of it. Our actions have helped us achieve positive business results so far and will help prepare us for the future. I’d like to thank each of you for your contributions and continuing cost discipline,” Rogers told employees.

He said that before restoring the pay cuts, the company wanted to see solid third quarter financial results, a satisfactory fourth quarter earnings outlook, and an expectation for 2010 to be better than 2009.

Steb Hipple, economist at East Tennessee State University, said the pay cut reversal probably won’t have a big impact on the holiday selling season.

“But for the Kingsport area, and to some extent the broader Tri-Cities area, this will be a positive element looking ahead to 2010 retail activity,” Hipple said.

Rogers and other Eastman executives were in New York City for an investors day with industry analysts on Tuesday. At the event, Rogers said Eastman expects to earn about $3.50 per share for 2009, excluding asset impairments and restructuring charges. That beats analysts expectations of $3.41 per share for the year.

Rogers also said the company expects to deliver 20 percent annual earnings per share growth from 2009 through the recovery by building on its core businesses and financial strength.

Rogers said the company expects earnings to reach $6 per share at the recovery period, projected for 2012, when Eastman is operating its factories at 90 percent capacity.

In comparison, Eastman’s earnings were $4.50 per share in 2008.

“We want to be an outperforming company,” Rogers said.

Company officials said Eastman will pursue joint venture projects and acquisitions where appropriate.

The company is also rethinking at least one project it was pursuing — an industrial gasification plant in Beaumont, Texas.

Eastman Chief Financial Officer Curt Espeland said the Beaumont project has faced unexpectedly high construction costs, and for it to move forward capital estimates must be lower, and financing must be made available through the Federal Loan Guarantee Program.

He said Eastman would seek a partner in the project if it decides to move ahead in the future.

And Eastman officials said Tuesday the company would temporarily shut down the IntegRex plant in Columbia, S.C., in December to repair equipment. The plant, which produces polyethylene terephthalate (PET) to make plastic packaging, has been plagued by operational challenges, which contributed to a third quarter operating loss of $10 million for the company’s performance polymers segment.

Eastman employs 10,000 people, including 6,800 in Kingsport.

BLOUNTVILLE — Tax increment financing (TIF) from Sullivan County is a go for an ethanol-from-trash plant under development at the old Raytheon plant in Bristol.

The Sullivan County Commission agreed Monday to grant up to five years of TIF for the Reclaimed Resources Inc. project.

Information presented to commissioners earlier this month estimated the TIF total — for both county and city real and personal property tax revenues — at between $4 million and $4.5 million.

Investors in the business, headed by area businessman Ted Cox, will pump an estimated $157 million into the project, which will bring more than 100 jobs to the local economy within the first two years of operation, said Richard Venable.

He’s chief executive officer of NETWORKS – Sullivan Partnership, the joint economic development effort of Sullivan County and its cities.

According to information presented to commissioners, Reclaimed Resources will take solid waste otherwise destined for landfills and process it into ethanol and other useable products — and produce no pollution.

Earlier this month, Venable described it as one of the most exciting things to happen in Sullivan County since George Eastman set up shop in Kingsport.

On Monday, County Commissioner Bart Long said it’s the best thing to come along since Bristol Motor Speedway.

Under TIF, the increase in property tax revenues that results from redevelopment of a property is earmarked to help fund that redevelopment.

The business pays the property tax, but the difference between the old tax bill and the new tax bill is then paid by the county — for a predetermined period of time — to a redevelopment fund.

Due to the inclusion of personal property in this project — not a factor in more typical retail-based TIF projects — the localities would see some increase in tax revenues during the TIF period.

Also on Monday, the commission approved switching carriers — from Blue Cross Blue Shield to United Healthcare — for county employee health insurance as of Jan. 1.

The change will mean a savings of more than $300,000 for the county — and county taxpayers — for the 2010 calendar year, Accounts and Budgets Director Larry Bailey said Friday.

United Healthcare offered another rate proposal that makes vision coverage voluntary, completely eliminates a “platinum” option employees have been able to enroll in for a higher premium out of their own pockets, and some increased co-pays.

A big change — and potentially a big new cost for some employees — is prescription medications Nexium and Prevacid are not covered by the United Healthcare plans endorsed by the Insurance Committee.

A United Healthcare representative who spoke to commissioners Monday said the company’s coverage offers “equivalents” to those drugs.

Comments from commissioners prior to the vote to switch carriers indicated county employees might not pay any potential increase in premium costs for the 2010 calendar year.

The resolution as presented stated the projected rate increase at $121,823 for the county’s portion of the premiums and $17,882 for the share of premiums paid by covered employees. The county foots the bill for 88.2 percent of employee health insurance premiums, while the employees pay 12.8 percent.

Elsewhere, the resolution calls for using $69,835 from the county’s fund balances to pay for the increased premium costs for the six months of 2010 included in the county’s current budget cycle.

County Commissioner Wayne McConnell asked to amend the resolution to make it clear the county would pick up at least half of whatever increased premiums employees will have to pay under the new contract — a move seconded by Commissioner O.W. Ferguson.

Commissioner Eddie Williams countered by asking the commission to just pass the resolution and take another look at the issue after Bailey takes a look at the numbers again after the enrollment period winds down.

Williams said it could turn out there is not really an increase in premiums at all.

McConnell immediately withdrew his amendment, saying he’d certainly go along with Williams’ offer for employees to see no increase.

The debate over insurance dominated the commission’s morning business, with comments at times more lively than at a typical commission meeting.

Multiple commissioners complained that they should have been given more notice of the proposed change and more time to understand the differences between old and new coverage and rates — and time to discuss those things with employees.

“We need to find a better way to do this,” Long said, later adding that insurance is “a racket” and “insurance companies are like vultures — they will take as much meat as you let them get.”

McConnell said he didn’t like the way he and others were talked to by commissioners who serve on the commission’s Insurance Committee.

“You come in here and say we don’t know what the hell we’re talking about,” McConnell said.

Long, McConnell and Commissioner Mark Vance voted against switching to United Healthcare.

In other business Monday, the commission:

• Rejected a proposal to shift the commission’s monthly meeting from morning (9 a.m.) to evening (5:30 p.m.)

• Had first reading of a resolution to sell the former Rock Springs Elementary School to the city of Kingsport for $1.

WASHINGTON — More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit.

Taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages, according to a report Monday by the Treasury Department’s inspector general for tax administration.

The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Barack Obama’s signature tax break in the massive stimulus package enacted in February.

Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new withholding tables issued by the Internal Revenue Service.

The withholding tables, however do not take into account taxpayers with multiple jobs or married couples in which both people work. They also don’t take into account Social Security recipients with jobs that provided taxable income.

The Social Security Administration sent out $250 payments to more than 50 million retirees in the spring as part of the economic stimulus package. The payments were meant to provide a boost for people who didn’t’ qualify for the tax credit.

However, they went to many retirees who also received the credit. Those retirees will have the $250 payment deducted from their tax credit — but not until they file their tax returns next year, long after the money may have been spent.

“While implementing a credit through reduced withholding is an effective way to provide economic stimulus evenly throughout the year, it is difficult to account for everyone’s circumstances,” said J. Russell George, the Treasury inspector general for tax administration. “More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes.”

Separately, the IRS estimated that about 65,000 taxpayers could face penalties for not withholding enough taxes in 2009 because of the overly generous tax credits. However, those taxpayers will be eligible to have the penalty waived, IRS spokeswoman Michelle Eldridge said.

The tax credit is also available for 2010. Russell said the problems will continue in 2010 if they are not resolved.

The credit pays workers 6.2 percent of their earned income, up to a maximum of $400 for individuals and $800 for married couples who file jointly. Individuals making more than $95,000 and couples making more than $190,000 are ineligible.

“Making Work Pay was designed to deliver much needed boosts to the paychecks of 95 percent of all working Americans,” said Nayyera Haq, a Treasury Department spokeswoman. “Since enactment, more than 110 million families have benefited from as much as $60 in additional take home pay each month to put toward their family budgets, serving as a steady boost to spending and consumption.”

For many, the new tax tables will simply mean smaller-than-expected tax refunds next year. The average tax refund this year was about $2,800. A little more than three-quarters of the 143 million taxpayers filing a return last spring received refunds, according to the IRS.

The IRS, in a response to the audit, advised taxpayers to check their withholding throughout the year to make sure they don’t get hit with an unexpected tax bill.

“The withholding system must approximate the tax liability of tens of millions of Americans, and therefore, cannot be tailored precisely to fit every individual situation,” Richard Byrd Jr., commissioner of the IRS’ wage and investments division, wrote in the agency’s response to the report.

The IRS has a calculator on its Web site so taxpayers can check whether they are withholding an appropriate amount of taxes from their pay. But with only a month and a half remaining in the year, it’s getting late for taxpayers to make adjustments.

BLOUNTVILLE — The Sullivan County Commission is expected to vote Monday on proposed tax increment financing (TIF) for a new trash-into-ethanol business at the old Raytheon site in Bristol.

Ted Cox’s “Reclaimed Resources Inc.” will be the first facility of its kind in the nation, county commissioners were told earlier this month.

“It’s one of the most exciting things to happen to Sullivan County since George Eastman decided to start up a little plant in Kingsport,” said Richard Venable, head of the county’s chief economic development effort.

Reclaimed Resources is a $140 million project which will employ 100 people within two years at an average salary of $35,000 (plus benefits), Venable said.

According to information presented to commissioners, the new business will take solid waste otherwise destined for landfills and process it into ethanol and other useable products — and produce no pollution.

“It is a major step toward a zero waste community,” said Mike Sparks, Bristol Tennessee deputy city manager for development.

Eight other similar facilities are in development elsewhere in the nation, Sparks said, and the nearest to Sullivan County is in Pikeville, Ky.

Under TIF, the increase in property tax revenues that result from redevelopment of a property is earmarked to help fund that redevelopment.

The business pays the property tax, but the difference between the old tax bill and the new tax bill is then paid by the county — for a predetermined period of time — to a redevelopment fund.

The requested TIF for the Reclaimed Resources project would last up to five years.

The former Raytheon plant was last purchased, in 1990, by a company that planned to produce a compound used in the manufacture of tires, but that operation never got off the ground and the 600,000-square-foot facility has sat empty since, Sparks said.

Total proposed TIF for the project (both county and city taxes) is estimated at between $4 million and $4.5 million, Sparks said.

Due to the inclusion of personal property in this project — not a factor in more typical retail-based TIF projects — the localities would see some increase in tax revenues during the TIF period, Sparks said.

He estimated that figure at $575,000 for the first four years. After TIF the amount would jump to $780,000 per year, Sparks said.

Also on the Commission’s agenda today:

• A proposal to shift the Commission’s monthly meeting from morning (9 a.m.) to evening (5:30 p.m.

• A resolution to sell the former Rock Springs Elementary School to the city of Kingsport for $1.

The Sullivan County Commission is scheduled to meet at 9 a.m. on the second floor of the historic Sullivan County Courthouse, 3411 Hwy. 126.

For more information about Sullivan County government, including how to contact individual commissioners and other officials, visit www.sullivancounty.org or call Sullivan County Mayor Steve Godsey’s office at 323-6417.

KINGSPORT — It’s early evening in downtown Kingsport and dozens of students are arriving at the Regional Center for Advanced Manufacturing on Main Street. Some are dressed in jeans and sweatshirts, some wear work clothes from a day at the plant. All are here to learn new skills to boost their opportunities for advancement and good pay in the workplace.

The new RCAM opened its doors to students Aug. 31 as part of Kingsport’s Academic Village. Through Northeast State Community College, the facility offers various degrees and certificate programs relating to skills needed in a manufacturing setting.

Miles Burdine, chief executive officer of the Kingsport Area Chamber of Commerce, said the RCAM serves as a link between workers needing skills and manufacturers needing workers.

“I have people call me all the time saying ‘I need a job, find me a job.’ And I have employers saying, ‘I need people to apply for my jobs.’ But the disconnect is — the one seeking the job doesn’t have the skills necessary to get the job. This is going to help close that gap,” Burdine said.

Seeing a need

The concept for the training facility stems back several years when the downtown paper mill, which was under Weyerhaeuser’s ownership at the time, recognized the need to ensure it had a future supply of qualified workers.

The mill has since become Domtar paper mill.

Domtar Manager Charlie Floyd said the mill needed to replace a number of employees who were preparing to retire from the maintenance work force.

“So we began to re-look our maintenance apprenticeship training program,” Floyd said.

The company decided to partner with Northeast State to offer class curriculum coupled with on-the-job training. Classes began in 2004 in a small building dubbed Chatfield at the corner of the paper mill property. Employees in the apprenticeship program could work during the day and attend classes at night.

But other industries, particularly Eastman Chemical Co., also faced training needs, and Eastman began sending some of their employees for training at Chatfield.

Within a year or so, the small training facility “was bursting at the seams,” Floyd said.

“We realized Chatfield wasn’t big enough to accommodate the training needs,” Floyd said.

He said the company considered expanding the training building, and thought about moving the training to the Northeast State campus.

At the same time, a mayor’s task force was established to redefine the downtown area. Floyd was part of that task force, and noted that education became a major focus of redevelopment, with plans for a higher education center just across the street from the mill.

“We said, okay, if we’re conducting all of this training right here at the corner of the mill site, and the higher education center is going to be constructed right across the street under Northeast State’s eventual leadership, it all just fits naturally together that we would need a larger, more modern facility that could be constructed in this vicinity and become a natural part of the higher education concept,” Floyd said.

Domtar donated the land for the facility and razed the Chatfield building to make way for the new Regional Center for Advanced Manufacturing.

Meanwhile, Eastman had announced its “Project Reinvest,” a plan to pump more than $1.3 billion into its Kingsport headquarters and manufacturing complex to modernize the plant and ensure its viability into the future.

As part of that initiative, the state of Tennessee pitched in $15 million for workforce development. From that, Eastman contributed $2.7 million to build the new RCAM facility.

In addition, the U.S. Department of Labor chipped in $1.9 million to pay for building equipment and scholarships.

Eastman is also providing scholarship monies, and established a new scholarship fund through the Northeast State Foundation. The new Eastman Chemical Company Workforce Development Scholarship is designed to assist adult students who enroll in selected programs of study, such as machine tool, welding and metal fabrication, electromechancial technology, and chemical process operations.

Parker Smith, Eastman’s vice president and general manager of Worldwide Manufacturing Support, said the RCAM is a much-needed tool for local industries to meet the needs of the future.

“What this has done is develop that pipeline of workers — skilled workers that we need,” Smith said. “This is something we’ve been looking at for the last couple of years.”

Burdine said the RCAM represents a true partnership among industry, government and education.

“Most of the time what you see is just a community college offering training. But this is a true partnership. And it could be a model for communities across the state,” he said.

Grand opening

The RCAM will hold its debut to the community with an open house Nov. 19 at 11 a.m. Tours of the facility will be offered, and state, city and chamber of commerce officials will join together with industry officials to mark the grand opening.

Jeff Frazier, an Eastman employee who’s overseeing the RCAM, said the facility has about 150 students to date, but is flexible in its design to accommodate much greater numbers.

“We could easily triple enrollment,” Frazier said.

The RCAM is holding classes mainly at night for students who work during the day. But in January, the facility plans to expand the schedule to include more day classes. And classes could be held in the early morning, late at night, or on weekends to accommodate the needs of business and industry.

Various degrees are offered at the RCAM through Northeast State. Examples of the associates of applied science degrees are general technology, electrical technology electrical, electrical technology electromechanical, and industrial technology welding/metal fabrication.

The RCAM also offers a technical certificate program in chemical process operations.

Frazier said the degree programs and certificates can change, depending on the needs of industry in the region. He pointed out the RCAM isn’t just for employees from Domtar and Eastman. All manufacturers are encouraged to take advantage of the facility.

“We’ve got the facility to provide training solutions for all area industry. This gives us the opportunity to help make them successful,” Frazier said.

On the flip side, the RCAM is here for the worker — either currently employed or laid off — who needs to boost his or her skills, Burdine said. Folks can sign up for classes directly through Northeast State.

Burdine said students who may not be certain what field they want to enter can undergo an assessment at the nearby Regional Center for Applied Technology. There, a person would undergo a series of tests to determine their level of skills and their interests. Based on the results, the person would be directed into an area of coursework, which would give them the skills necessary to apply for jobs that would make sense for them.

And financial help is available. Katie Yates, Northeast State vice president of institutional advancement, said students can apply for $500 scholarships per semester. The cost of the training totals $2,500 a year, and many students are eligible for additional awards and scholarships, such as Pell Grant money, Yates said.

Since the Workforce Development Scholarship Program began last year, some 372 scholarships have been handed out, benefiting 214 students with a total of $195,940 in training money. (While the RCAM was being constructed, training was held at the old Quebecor site.)

Burdine said the RCAM represents a huge opportunity for economic development, not only to help existing industry but also to attract new manufacturing companies.

And Burdine and Smith said they also want students in the public school system to understand that they have an option to attend the new RCAM after they graduate high school.

“You don’t have to go to a four-year university to make a good living. You can go get a two-year associate’s degree and make a darn good living doing very challenging work,” Smith said.

“We’re trying to get the message out to our students — you’re not done when you graduate high school. You’ve got to continue on to get further education, whether it’s a two-year degree, four-year degree, technical skills — in order to be marketable,” Burdine said. “And that’s what this whole Academic Village is about.”

For information, call the RCAM at (423) 354-5149. Information is expected to be available on the Academic Village Web site at http://kingsporthighered.org/ after the first of the year.

KINGSPORT — Power customers in Kingsport can expect another rate increase.

Kingsport Power, doing business in Tennessee as AEP Appalachian Power, filed with the Tennessee Regulatory Authority on Friday, asking to pass through to its retail customers an increase in purchased power costs, under its existing tariff.

Kingsport Power is a subsidiary of American Electric Power and buys its power from fellow AEP subsidiary Appalachian Power Co.

The company is seeking approval to increase rates by about 5.5 percent, effective Jan. 1.

Kingsport Power serves 47,000 customers. After the rate increase, a residential customer in Kingsport using 1,000 kilowatt hours a month will pay about $81.82, up $4.17 a month from the current rate.

“Even with the proposed increase, it’s still one of the lowest rates for electricity in the region and in the nation,” said AEP spokesman Todd Burns.

Last year, Appalachian Power received approval from the Federal Energy Regulatory Commission to amend the Interconnection Agreement between Appalachian Power and Kingsport Power to reflect an increased level of purchased power costs over a three-year period.

In conjunction with the federal approval, the Tennessee Regulatory Authority approved a pass-through of increased purchased power costs for the first year of the agreement. Friday’s tariff filing with the TRA reflects new surcharges in the Purchased Power Adjustment Rider to reflect increased generation and transmission costs.

Burns said the latest rate increase does not affect Appalachian Power customers in Southwest Virginia, who have already seen several rate hikes in the past year. Those Virginia customers, Burns said, are paying 23 percent more today for their electricity than they did a year ago. A Virginia customer pays about $100.14 a month for 1,000 kilowatt hours.

Last January, Kingsport customers saw their first rate hike since 1992. Rates went up about 20 percent.

The company advises customers who may have difficulty paying their power bills to visit www.appalachianpower.com or contact Appalachia Power by phone at 1-800-967-4237 to work out payment arrangements.

On Thursday, AEP announced a partnership with Dollar Energy Fund to help low-income families in Tennessee with their electric bills. The partnership will help improve contributions and distribution of funds.

AEP customers can make tax-deductible donations to the program at the same time they pay their monthly electric bills. In addition, AEP stockholders are contributing $25,000 to the fund.

Eligibility guidelines and applications for help can be found online at www.dollarenergyfund.org.