With businesses closing and thousands of people across the state unemployed, Johnson City Manager Pete Peterson said those economic hardships cause less spending in the local economy.
“With the state of Tennessee being based on a sales tax-driven economy, any lack of spending is a direct impact on our local budget,” Peterson said.
During a special called meeting at the Memorial Park Community Center on Thursday, Johnson City commissioners heard an update on the status of the general fund for the city government’s fiscal year 2020 and proposed FY 2021 budgets.
Budgeted revenues for the general fund are 3.2% lower in FY 2021, $88.95 million, compared to those budgeted in FY 2020, $91.9 million.
Although the city budgeted $91.9 million in revenues for the general fund in FY 2020, officials anticipate that number will actually come in at around $86.5 million by the end of the fiscal year, a roughly $5 million difference.
Those differences are driven in large part by declines in local sales tax revenue, minimum business tax revenue and state shared sales tax revenue.
Peterson said the city is planning for a conservative fiscal year 2021 budget, which gives officials the leeway to pass a budget amendment after Jan. 1 if the financial outlook improves.
“If things get better, then we can do a lot of things that aren’t in this budget,” Peterson said. “But if things stay on this line that we’ve laid the budget out on, we’re going to be OK.”
Revenue challenges have also forced the city to adjust its original plans for the FY 2021 budget.
Johnson City is now planning on cutting a 4% pay plan adjustment for employees worth $1.2 million, which would have been the third in a planned three-year increase.
The original FY 2021 budget would have also set aside about $3 million in cash funding for equipment, the average for a typical year, and $1 million for projects.
Most cash-funded equipment in the FY 2021 budget will now be funded using grants and the city will only be using money carried over from the prior year for projects.
Unlike prior budgets, which have typically followed predictable trends, Peterson said city officials are being forced to view everything from a conservative perspective — planning for the worst but hoping for something better.
“It’s been a challenging budget,” Peterson said. “It’s forced us to forego a lot of things that we normally budget for ... such as capital projects, capital equipment, employee compensation. ... We’re making a lot of sacrifices, reductions in the budget, but they’re all aimed at not reducing the quantity of quality of services delivered to our customers.”
New water and sewer facility
For $315,789.48, Johnson City will buy a roughly 21-acre plot of land at 216 Fairhaven Road for a new water and sewer services facility.
Commissioners voted unanimously Thursday to assume the option for the purchase of the property from Realty Trust Group.
“For a number of years, the water and sewer department has had a need to get a larger and a new services complex,” Peterson said.
An existing complex at 901 Riverview Driver currently houses the city’s engineering, facility maintenance and line maintenance and construction divisions.
That site, staff said, is now about 50 years old and has reached the end of its service life. It also poses flooding concerns since it runs alongside a tributary of Brush Creek, and there is no remaining space available for additional employees.
An appraisal conducted in 2019 estimated the value of the property on Fairhaven Road as $251,000. Commissioners questioned why the $316,000 price tag was about $65,000 more than that appraisal.
“$65,000 over what it was appraised seems like a lot to go over,” said Commissioner Todd Fowler. “And the bottom line is this is the second time in the last couple years that people have come back when we’re buying property that we’re buying it for a lot more than anybody thinks it’s worth, so I’m not happy about it again.”
Hank Carr, senior vice president at Realty Trust Group, said the property is owned by an estate, meaning there’s multiple family members involved. Carr said the family has their own appraisal of the land, which was “substantially higher” than the 2019 appraisal.
“They started out at a value north of $400,000,” Carr said. “We started out way down in the low-to-mid $200,000 range. We met at this number, but this was the number it took to get all the heirs to agree.”