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Aldermen not sold on Kingsport garbage fee

Matthew Lane • May 17, 2016 at 7:54 AM

KINGSPORT – As it currently stands, the Board of Mayor and Aldermen will be voting next month to create a garbage collection fee and roll back the property tax rate by three cents, thus allowing $1.3 million in freed-up funds to go toward implementing a host of One Kingsport initiatives.

However, not every member of the BMA is on board with the funding proposal, with some aldermen saying Kingsport has enough money in the pipeline to fund the initiatives without creating a new fee for residents.

During a BMA work session Monday afternoon, city and elected officials spent about 90 minutes discussing the funding proposal before a packed meeting room in city hall. The discussion basically broke into two camps with a majority of the board in favor of the funding plan, while three members raised concerns about the amount of money raised or just straight up opposed the creation of a new fee.

The BMA has to approve the 2017 budget before July1 — the beginning of the next fiscal year.

 

Last week, City Manager Jeff Fleming presented the BMA with a balanced budget that includes no property tax increase, slight increases to the water and sewer rate and 22 new positions (most funded by the new power franchise fee).

Not in the budget was funding for $3 million worth of first year One Kingsport projects, which include beautification efforts, policy changes, master planning efforts and initial steps on bigger projects such as a large outdoor venue, upgrading Bays Mountain Park and creating maker-space downtown — roughly 40 to 45 ideas.

At the request of the BMA, Fleming ran the numbers on at least 10 different funding plans and last week brought forth the garbage fee/rollback proposal.

What’s on the table is for Kingsport to implement a $12.75 a month garbage collection fee and to roll back property taxes by three cents.

How the numbers play out is the garbage fee would generate $3.8 million annually and Kingsport would use this money to create an enterprise fund (like water and sewer) to fully fund the collection of garbage (household waste) and recycling.

Fleming said the garbage fee would come on residents’ water/sewer bills and that there would not be an “opt out” provision. In addition, Fleming said trash/brush collection would not be in the enterprise fund and would continue to cost the city $815,000 annually, with the money coming from the general fund.

By creating an enterprise fund, this frees up $3.8 million in the general fund. The property tax rollback would cost the city about $520,000 a year, thus leaving $3.3 million. Take away $700,000 in the estimated loss of Hall Income Tax revenue and the amount is down to $2.6 million.

Fleming has proposed splitting this figure between the general fund and One Kingsport projects.

City officials say the rollback relieves pressure on businesses that already pay more in taxes and improves Kingsport’s financial position.

According to information provided to the BMA, a resident living in a $134,000 house (the median home value in Kingsport) would pay an additional $153 a year for garbage collection while saving $10 a year on property taxes. The proposed hike in the water and sewer rates for the average user is about $10 a year.

In that same information is the estimated savings an average business would have with a three-cent property tax rollback. A small downtown business would save $24 a year, a bank $1,300, a mall $5,640, a medical office building nearly $12,000 and a large industrial property $132,000.

Vice Mayor Mike McIntire kicked off the discussion Monday by expressing concern over the garbage fee.

“No question it’s going to be a burden on our low income community. Probably 20 to 30 percent of the people who live here ... it’ll be an issue,” McIntire said. “The real concern I’ve got is the unintended consequences.”

McIntire offered a counterproposal to the plan — instead of lowering the property tax rate by three cents, lower it by eight cents. The reason being, the initial plan raises more money than what’s needed to do the first-year projects, he said.

“About $700,000 to $800,000 is what’s needed, not $1.3 million,” McIntire said. “Most of the projects are pretty ill-defined at this time.”

Alderwoman Colette George said she would not be voting for the garbage fee, though she did support such a move two years ago. George pointed out how Kingsport had $2.2 million more in revenue last year than originally budgeted.

“For a lot of projects, there’s money already in the pipeline. I feel that we can do the things we want to do without making a change,” George said. “Right now, I feel we have the money to do the projects without adding another revenue stream. I’m not really for it.”

Alderman Tom Parham said he believes a majority of the funds for the year-one projects needs to be committed at this time.

“Do we buy into the vision of One Kingsport? I think we’ve all said we do. It’s a question of how we fund it,” Parham said. “I suggest we really have an obligation to go forward with those recommendations.”

The 2017 budget, which includes a garbage fee and property tax rollback, is scheduled to go before the BMA in June.

Mayor John Clark said that vote would be the second most important vote he has taken since serving on the BMA. The first being the financial incentive package for Eastman Chemical Co. to keep its headquarters in Kingsport.

“The entire reason why we’re here debating this issue is we’re trying to solve a problem. Kingsport has not grown on its own,” Clark said, adding the city needs to continue to invest in itself, to give the city a chance to grow. “From my perspective, what we do at this point, this is a vote to fund the future.”

Clark said rolling back the property taxes would be economic development for businesses.

“It could save a job, add a job, afford businesses to buy and sell products in our city,” Clark said.

Not only were the veteran members of the board split on the issue, the freshmen members were divided as well. Alderman Tommy Olterman, who supported the garbage fee last week, voiced his opposition to the measure on Monday. Alderman Darrell Duncan and Alderwoman Michele Mitchell both spoke out in favor of the proposed funding plan.

More than a dozen folks stood during Monday’s meeting and in addition to city employees and regular citizens, were representatives of the Kingsport Chamber of Commerce, the Kingsport Office of Small Business Development and Entrepreneurship, Healthy Kingsport, the Downtown Kingsport Association and the young professional group PEAK.

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