City Holds Annual Budget Retreat Jan. 31, 2008

Mayor Bill Haslam told City Council members on Jan. 31, 2008 that the city’s financial performance through the first half of fiscal year 2007-2008 has slightly exceeded expectations despite a softening of the overall economy. 

“Things are good and we like the position that we are in,” Haslam said during the city’s annual budget retreat for council and the directors of various city departments, “but there are also some things we need to keep a close eye on, like sales tax revenues and rising energy costs.” 

The group gathered in Southern Graces at the Sunsphere for the event that stretched through the morning Thursday and into the early afternoon. 

According to a presentation by Jim York, the city’s finance director, the city expects revenues to come in at about $165.5 million by the end of the 2007-2008 fiscal year on June 30 – or $2.5 million more than projected. 

He also reported that Knoxville should finish the fiscal year with a fund balance of $42.2 million. 

That’s down from the $46.6 million fund balance the city had at the end of fiscal year 2007 but in December - at Haslam’s request - city council voted to spend roughly $8 million from the general fund on a variety of projects. 

Those mid-year expenses ranged from a new ladder truck for the Knoxville Fire Department to ice making equipment for the Civic Coliseum, to $550,000 in additional sidewalk money to $781,000 for energy efficient LED traffic lights. 

If the city had not chosen to make the $8 million mid-year appropriation the fund balance would exceed $50 million. 

But Haslam said the money was used for projects, like the LED traffic lights, that will save energy costs in the long run, or for capital improvements the city wanted to make while the economy was strong. 

The city’s fund balance was only $18 million in 2004, Haslam’s first year in office. 

York said that the city’s revenues are higher than expected so far this year because of “some strength in property taxes,” where the assessed values came in higher than expected and Knoxville is doing better than anticipated in some other areas like beer and alcohol taxes. 

But he also pointed out that the city is seeing some weaknesses in sales tax numbers, which were down slightly in the first half of the year. 

York also indicated that interest income, which was up for the first half of the fiscal year, would go down over the next six months – a reflection of the economic woes nationwide. 

“One of the issues that will affect us next year is fuel costs,” York said. “If we miss (estimating the costs) by a penny a gallon that translates into $10,000 over the course of a year.” 

The city, which buys a little more than one million gallons of gasoline a year, puts together its budget in the spring meaning York and others will try and predict the volatility of gasoline prices over the next year. 

The current budget, for example, calls for Knoxville to pay $2.25 a gallon (the city doesn’t pay gasoline taxes) for unleaded gasoline. 

The latest price was actually $2.28. 

York also reported that the city debt is falling. 

Haslam closed the meeting by telling the group that the city’s outlook is good going into the second half of the fiscal year.


BUDGET INFORMATION

2008-2009 Budget Info
Six Month Financial Report [PDF]
Budget Retreat Presentation [PDF]
Budget Archive (Budgets from years 2001-current year)


BUDGET CALENDAR

January 31, 2008 – City of Knoxville Budget Retreat and Six Month Financial Report released
February - March, 2008 – Departments Submit Budget Requests, Base Numbers Calculated, and Capital Budget Prepared
March 31 - April 3 – Mayor’s Budget Hearings
May 1, 2008 – Mayor’s Budget Address
May 6, 2008 – First Reading of Budget and Tax Ordinances
May, 2008 – Council Budget Hearings & Public Hearing
May 20, 2008 – Second Reading of Budget and Tax Ordinances