BUDGET, FY 2014/15 -- Large tax Increase Looming

BUDGET, FY 2014/15 -- Large tax Increase Looming

Postby Nick Della Volpe » Sat May 24, 2014 7:18 am

THE PROPOSED BUDGET
The Mayor has proposed a $17M budget increase for the new fiscal year 2014/15, which starts July 1, 2014. Over $7M of that is to address the ever-growing pension costs. That proposed increased budget raises the General Fund (or city operating funds) from $183M to $200.5M. That increase translates into a $0.34 tax increase per $100 property valuation.
A significant portion of that new money is not needed for the upcoming fiscal year needs, but fall into the categories of discretionary (new) spending and/or failure or refusal to make cuts or changes in existing departmental budgets. The mayor argues this increased approach will keep the positive "buzz" or momentum going about our downtown transformation. The bigger-than-needed increase arguably also provides political cover from having to address rising pension costs next year, when the mayor will presumably run for re-election -- so why not collect a little extra tax now to avoid sticky issues during an election year?

WHAT CAN BE DONE?
The Mayor's budget, while possessing many attractive features, fails to address the need to live within our means. Tax revenues are basically flat. We need to trim the sails a bit, or at least minimize any tax increase. The government, after all, is spending your money. We need to cut costs where we can, and certainly limit ambitious new initiatives until funds available.

We just held the City Council's charter-mandated budget hearings last Thursday, May 22nd. The first opportunity for Council to act on the budget is Tuesday, at May 27th Council meeting. It could have a second chance to act two week's later in the June 10th meeting.

I intend to ask my colleagues to consider to reduce the proposed budget by at least $6M. This would still leave essential services untouched. It would respect the Mayor's desire to give 2 1/2% automatic pay increases and her decision not to make departmental cost cuts-- even though she briefly explored across-the-board budget cuts back in February. It would however reduce or at least defer certain discretionary expenditures, the near doubling of Agency Grants, and the total amount of her proposed tax increase on city residents and businesses. I believe we have a duty to live within our means. Especially since we are spending your hard-earned money.

Greater cuts could be made, of course, if there was the political will to do so. Presumably all options will be discussed at next Tuesday's Council meeting.
Nick Della Volpe
 
Posts: 110
Joined: Mon Jul 02, 2012 4:00 pm

Re: BUDGET, FY 2014/15 -- Large tax Increase Looming

Postby Nick Della Volpe » Mon May 26, 2014 10:40 am

PROPOSED BUDGET AMENDMENT -- Some Modest Cost Savings Measures
1). Why did Agency Grants nearly double, increasing from $712k in the current year, to some $1.23M for next fiscal year? Do we need to raise taxes in order to give away your money to charities, even though they are good ones? Included among those increased amounts are such items as:
-- Boys and Girls Club capital grant = $250k
-- HelenRoss McNabb Center = $45k
-- Knoxville Botanical Garden capital grant = $250k
-- East Tn Civil War Alliance =$4500
-- Connect Ministries capital grant =$1500
We should reduce Agency Grants by at least $500k, and let the Administration resort how the remaining $770k, which is still an increase over last year.

2). New budget initiatives include:
-- Historic Preservation fund = $500k
-- Public Art = $250k
-- Downtown Restrooms = $250k
-- The Chambers Innovation Valley (doubled) =$400k
-- Lakeshore Park = $2M (some is for demolition required by contract)
-- Commercial Facade Grants raised $300k to $500k
-- Zoo Improvements = $10M (part of new debt issue)
-- Parking Meter Upgrade = $500k
-- Greenway Corridors = $1M
Those might all be neat projects, but all in one year? When revenues are tight? At least $3.7M of those expenditures could be cut or moved to the following year.

3). Other savings could be garnered by:
-- reducing the amount of the proposed $31M to 32M in new general obligation bonds to be issued. Annual debt service will rise by some $2M per year. What if we only borrowed say $20M? That could save some $650k in annual debt service costs.
-- giving this year's 2 1/2 % pay increase as a bonus, instead of base pay? It still shows up in the employees pay check. That one-time action would save an estimated $300k in collateral costs computed on base pay.

4). City Council has already discussed sacrificing their 202 discretionary funds for next year. Those $90k in funds do a lot of good in neighborhoods, but again we are spending your money. If Council were bolder, we could also ask each Department to shave just 1% or 2% of their total costs. A good manager could sit down with key staff and do that, and improve overall efficiency. That would save over $1M of taxpayer monies.
Nick Della Volpe
 
Posts: 110
Joined: Mon Jul 02, 2012 4:00 pm


Return to City Of Knoxville, Tennessee / City Council Forum

cron