Mayor Ralph Van Brocklin kicked off Thursday’s meeting with a somber-sounding statement. It contained a similar tone to his statement a few months ago when he warned state Sen. Rusty Crowe, R-Johnson City, not to move annexation legislation forward that potentially could retard municipal growth and cause tax revenues to slip away.
The legislation did go through, and the combination of state-level decisions and a sagging economy now has city commissioners on their heels.
“I wanted to prepare you, as citizens, for the fact that as we go through the budgetary process these next two months, you will hear a lot of discussion regarding revenue sources, including a property tax increase,” Van Brocklin said as commissioners remained silent and looked at audience members. “Please allow us the latitude of open discussion without rancor.”
As predicted by City Manager Pete Peterson nearly a year ago, Johnson City’s proposed fiscal 2015 budget numbers show that both revenue growth and the ending find balance are projected to be flat.
“Growth is flat at this point, but expenses are increasing,” Van Brocklin continued. “And, our operating cushion — our fund balance — is as low as we can take it without impacting our bond rating. We have a $2.5 million dip into fund balance this year (money that will be required to make ends meet), which will have to be dealt with in the fiscal 2015 budget. And, we know the schools will come to us with a $3 million-plus request.”
Commissioners did not comment before, during or after the mayor’s remarks. They have been meeting on and off on Saturdays to rake through priorities, and Van Brocklin’s statement apparently was a culmination of thoughts expressed during these meetings.
He said the loss of ability to annex limits growth and therefore limits revenue to run the city and that the municipal taxpayer is being asked to shoulder a greater burden. He also mentioned Washington County Schools’ request for a new piece of mixed drink tax revenues may result in “a historical liability to the city and city schools and conceivably bleed another $300,000 per year from municipal fund monies that the municipal taxpayer will have to make up.”
He also said the county was dragging its feet on the development of a new tax increment financing district in the Boones Creek area near Interstate 26. The County Commission’s Budget Committee has postponed action on the Industrial Development Board’s Impact Plan for the district.
“No matter that the infrastructure existing in the corridor was paid for by the municipal taxpayers,” Van Brocklin said. “No matter that infrastructure and service costs to the portion of the district that lie outside the piece of property to be developed will be borne strictly by the municipal taxpayers. County leadership feels that they should receive more. No fiscal responsibility beyond the development itself, but more money ... or this does not go forward. Instead of cooperation, we get roadblocks.”
County Mayor Dan Eldridge began his reply to this statement late Thursday night with one word: “Whoa.”
He said the $300,000 cited by Van Brocklin regarding mixed drink tax revenue is the total amount the city and county would receive. Eldridge also strongly disagreed with Van Brocklin’s view on the TIF district.
“The only statement that has been made is the expectation of an equitable return on county taxpayers for their investment,” Eldridge said. “He got all of that from a single statement? No one has been holding up the TIF project. I have been as big a cheerleader as anyone, and the only thing holding us up is a document that properly addresses funding.”
The coming fiscal year begins July 1 and ends June 30, 2015. The process to formulate the city budget began months ago, and department heads have been and will continue to meet with commissioners either in workshops or at City Commission meetings.
City commissioners will pass the final product in the form of an ordinance, a task that legally must be completed before the end of June. There will be three readings of the ordinance, including a public hearing during the second reading.
“Somewhere along the way, we’ll likely call a special meeting so we can get everything completed,” said Bob Wilson, assistant city manager. .
In a comparison of budgeted numbers for FY 2014, which ends June 30, the city’s total revenue is projected to rise by $100,000. But that’s not a significant increase considering the current year’s budgeted revenues and next year’s proposed budget numbers are relative the same at about $76 million.
Revenue from local taxes is projected to increase from about $60.9 million to about $61.2 million. However, that increase — about $335,000 — is a far cry from the jump that occurred from 2013 to 2014 of nearly $1 million.
On the expenditure side, a proposed drop in the city’s capital equipment, capital projects/facilities, Freedom Hall Mass Transit and Transportation Planning funds drops the tally of about $78.3 million in FY 2014 to about $75.7 million in the coming year. The belt-tightening proposal would drop the city’s expenditures by about $2.5 million.
The proposed fund balance, which dropped by more than $2 million from 2013 to 2014, is projected to increase moderately from about $14.2 million to $14.6 million next year.
Excluding Food Services, and the federal projects, school projects and educational facilities funds, the General Purpose School fund’s total revenues — derived from taxes, charges for service, direct federal and state education funds — are proposed at about $51.1 million for the coming year. That a roughly $600,000 increase from what was budgeted for this fiscal year.
Expenditures in the General Purpose School Fund, however, have markedly increased. The projected ending number for this fiscal year is about $62 million, but next year’s proposed budget shows about $65.8 million, an increase of about $2.8 million, or 4.3 percent.
School officials have warned for years that unfunded federal and state mandates would cause this number to shoot up. Expenditures in fiscal year 2013 were about $60.7 million — more than $5 million less than the current proposed number.
In other business, commissioners voted 3-2 on first reading to approve Evolve Development’s request to rezone the mill property from B-2 (central business district) to B-3 (supporting central business district). The vote is the first of three required readings — actions commissioners painstakingly went through once.
Due to a city staff member not publishing a notice of a second reading and public hearing to rezone the former Model Mill property to develop a 216-unit apartment complex off West Walnut Street, the process, by state law, had to begin anew.
Van Brocklin and Commissioners Jenny Brock and Jeff Banyas voted for the rezoning. Vice Mayor Clayton Stout and Commissioner David Tomita opposed the move — as they did during the first go-round.
The second reading and public hearing is set for June 5. A third reading is expected June 19.
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Editor's Note: An earlier version of this article misstated how long the city had gone without a property tax increase.