City Holds Annual Budget Retreat Feb. 16, 2009

Mayor Bill Haslam told City Council members on Feb. 16, 2009 that the city has posted a steady financial performance for the first half of fiscal year 2008-2009 during the worst economic climate in decades. 

But the mayor also told Council that the city has seen a consistent weakness in revenues for several months, particularly sales tax numbers, and faces major challenges in the upcoming 2009-2010 fiscal year – which begins July 1. 

“This year, right now, revenues are running on a pace to be about $3 million short of what we budgeted,” Haslam said. “But we think we can take the steps necessary to make sure that this budget is a balanced budget at the end of the year.” 

Haslam made his remarks during the annual budget retreat for Council and the directors of the various city departments held in the Square Room at Café 4 in Market Square. The mid-winter meeting is designed to reflect both the city’s current financial status and also aims to provide a preview of the next fiscal year’s budget.

He credited the city’s being able to weather the economic storm as well as it has to its focus in past years on controlling expenditures while trying to enhance revenues.

Jim York, the city’s director of finance, told the group that the city projects revenues of roughly $165 million by the end of the 2009 fiscal year on June 30 – or about $2.97 million less than the city projected receiving in FY 2009.

The city, however, will probably end the year down only about $240,000. That’s because the city will also spend nearly $3 million less than it had budgeted in the FY 2009.

So, while the city has received less money it has also reduced its spending by roughly the same amount.

“Relatively speaking we’re in better shape than most governments,” York said. “We are going to have a tough year next year. This year (FY 2009) will be fine and we’ll get through 2009-2010. But 2010 and 2011 will be really hard.”

The city will eliminate the $750,000 allocation for bonus payments to employees as part of the effort to cut costs and balance the budget for this year.

The city, however, plans to continue its ongoing three-year, $9.3 million commitment to raise employee salaries and benefits.

York also reported that the fund balance – essentially the city’s savings account – should finish fiscal year 2009 at $49.3 million, down slightly from $49.5 million at the start of the fiscal year.

The fund balance was $18.4 million when Haslam took office in 2003.

The city’s biggest financial problem has been a steady decline in sales tax revenue over the past year. The city projected receiving about $50.4 million in Local Option and State Shared Sales Taxes in fiscal year 2009-2010.

But the current projection – based on the declining figures – is that the city will receive about $47 million by the end of the fiscal year.

Those figures do not include the $100 million in city sales tax revenue that goes to support the Knox County School System.

The weakness in sales tax has been somewhat offset by property tax revenues that have remained steady during recent months according to York’s presentation. He also reported that the city’s debt is declining.

Overall York indicated in his report that despite the difficulties the city should reach the end of the fiscal year in June in relatively good shape, given the economic environment.

The outlook for FY 2010 will be more challenging depending on how long it takes for an economic recovery to begin.

“It will be the toughest budget we’ve had since several of us have been working together,” said Haslam, who took office in December of 2003, before adding, “but it’s our job in tough times like this to balance the budget while maintaining a high level of services and continued investment in the city.”


BUDGET INFORMATION

2009-2010 Budget Info
Six Month Financial Report [PDF]
Budget Retreat Presentation - Finance [PDF]
Budget Retreat Presentation - KAT [PDF]
Budget Retreat Presentation - Cumberland, Downtown North, Policy [PDF]
Budget Retreat Presentation - Energy & Sustainability [PDF]
Budget Archive (Budgets from years 2001-current year)


BUDGET CALENDAR

February 16, 2009 – City of Knoxville Budget Retreat and Six Month Financial Report released
February – March, 2009 – Departments Submit Budget Requests, Base Numbers Calculated, and Capital Budget Prepared
April 1 - April 2, 2009 – Mayor’s Budget Hearings
April 9, 2009 – MPC Hearing on Capital Improvement
May 1, 2009 – Mayor's Budget Address
May 5, 2009 – First Reading of Budget and Tax Ordinances
May 6-18, 2009 – Council Budget Hearings & Public Hearing
June 2, 2009 – Second Reading of Budget and Tax Ordinances