Mayor Haslam Presents the Budget

May 1, 2008 - Mayor Bill Haslam presented a 2008-2009 City of Knoxville budget Thursday showing that the city is in good financial condition despite a difficult economic climate nationwide. 

The city’s budget includes funds to continue city services at current levels, escalates the city’s ongoing redevelopment efforts and unveils an ambitious plan to raise employee salaries to market rates in just three years – all without raising taxes or dipping into the city’s fund balance for operating money. 

"Thanks to conservative, responsible budgeting, the hard work of our city employees, and some real growth in our city economy, this budget does not require a tax increase," Haslam told a crowd of about 700 gathered at the new SYSCO Distribution Center for the mayor’s annual budget luncheon.

The event marked Haslam’s first budget address during his second term in office. 

"I want to repeat some good news you may have heard. Just a few weeks ago Standard & Poor’s upgraded our bond rating to AA+, the highest in the city’s history," Haslam said. "It is a great testimony to the management of city dollars, Council’s responsible approach to spending and the hard work of our employees." 

"Our reserve fund has increased from $18 million to $42 million and our total outstanding debt is 20 percent lower than it was when we came into office," he said. 

The mayor’s proposed general fund – or operating – budget for FY 2008-2009 is $168.5 million, up about 3.3 percent from last year’s $163 million figure. 

The proposed capital budget – which includes everything from building new sidewalks to buying vehicles to flood control projects – is $37.1 million, a little down from the $37.3 million in last year’s budget. 

Haslam said the budget was conservative in light of the current economic climate. 

"I think all of us would agree that this is a time to be particularly cautious in how we spend the city’s money," he said. "Just like in how you spend your own money; there are always a lot of things we would like to do that we can’t do as a city – just like at your house." 

But the mayor also indicated it is a budget that seeks to move the city forward. 

"We still face the fact that if we just keep on with business as usual our costs increase faster than our revenues," he said. "I can assure you that we have not been content with business as usual to this point and we won’t be in my second term." 

Most of the increase in the operating budget is primarily due to the new compensation plan and the rising costs of fuel and energy. 

The City will add $3.8 million to salaries and benefits over the next three years to bring all city employee salaries to market levels. 

That amount is in addition to the $5.5 million the city is already committed to spending on salaries and benefits over the next three years. 

A comprehensive salary study completed this year indicated the total compensation of Knoxville’s employees was only about 89 percent of the compensation of their peers in comparable public organizations. 

The mayor and City Council commissioned the study last year after questions arose about the city’s lagging salary structure. 

Rising energy costs have also hit the city hard. 

The FY 2008-2009 budget includes $5.4 million to purchase fuel for the city and Knoxville Area Transit’s vehicles. 

Last year’s budget included $3.85 million for fuel. 

The mayor’s budget address also focused on other major themes including: 

Continued development efforts in the core of the city including downtown, the South Waterfront and efforts in the early stages to revitalize Cumberland Avenue and the Downtown North area. 

Making Knoxville a greener city by carefully managing its energy consumption and costs. 

Making investments in infrastructure including $750,000 in building new sidewalks, $4.4 million into paving projects, and $2.5 million on correcting longstanding drainage issues. 

Being good stewards of the public’s tax dollars and insuring a return on the city’s investment both in human capital and physical infrastructure. 

"Our job is to make sure we don’t burden future citizens with obligations without the assurance that we are also creating the climate for economic growth and the ability to keep our tax rate low," Haslam said. "I have put our budget together with this in mind."