Blount County government is $7 million in the hole for the current fiscal year and needs to find $9 million in cost reductions for next fiscal year. Despite the challenge, Blount County Mayor Ed Mitchell said Thursday he is optimistic.
Mitchell addressed the Blount County Chamber during the county government briefing.
“Despite good work in reducing the number of county employees and cutting back on discretionary spending, we have gone from being half a million dollars in the black in 2009 to a $6.8 million deficit in this current year,” he said. “We are currently operating on a deficit budget of $6.8 million. In other words, our projected revenues are nearly $7 million lower than our budget appropriations for the current fiscal year ending next June 30.”
Mitchell explained how the county in two years could go from having a balanced budget with expenditures slightly lower than revenues to where the budget is now.
The mayor said the county’s projected revenues this current year are $3 million lower than in 2009. “About half of that is due to the recessionary effect on our fees and local taxes and the other half is due to the reduced population of fee-paying pre-sentencing federal inmates in our jail,” he said.
Mitchell said that at the same time, the cost of providing benefits to approximately 2,200 employees has increased by $5 million, half in medical claims and half in the state-mandated rate charged for participation in TCRS. “I have seen first-hand the hard work given by the employees in my departments,” he said. “They give a lot of themselves to the job and honestly do it for less when comparing other governmental pay scales, which is why we value providing the benefit packages we do.”
The mayor said the two major issues facing the county are the debt and the current fiscal year budget.
Mitchell said the county has $238 million in debt. “Although we spent this money on bricks and mortar primarily for new and improved schools, I believe we have gotten a little ahead of ourselves,” he said. “I believe that we have too much debt and we should do two things: stop borrowing money, other than refinancing to reduce the risk of our debt profile and to pay off the $46.5 million balloon payment due next June. Secondly, find a way to pay down the debt.”
The mayor said that if the county stays with its current amortization schedule, the county won’t pay off the debt until 2037. “I think this is too long, but unfortunately, to shorten this timeline, we would need to add to the tax rate for early debt retirement and it may be a while before we can afford to do this,” he said. “So what are we going to do about this problem? Well, I hope to build a consensus with all the elected officials, the commission and the Board of Education to attack the problem on the expenditure side. We are going to have to all agree that these are tough times for everyone and that we will all need to make sacrifices to balance the budget.”
The mayor said the fiscal situation doesn’t get any easier in 2010-11.
“There are some pretty significant headwinds to fight through to achieve a balanced budget next year,” he said. “We are opening a new school next year. And health care costs continue to increase with all the uncertainity about the healthcare legislation. In other words, we need to identify about $9 million in cost reductions to avoid a property tax increase. This will not be easy as this figure presents about 10 percent of our controllable spending during the year.”
Mitchell said commissioners must balance the budget next year. “We are using nearly $7 million, or 30 percent of our combined rainy day funds this year and we cannot afford to do this for another year,” he said. “It is simply not fiscally responsible leadership. It would take our cash reserves far too low and put our credit rating at risk.”
The mayor said that from a financial stand point, there is a lot of work to do. “My job is to bring everyone that has a part in spending the taxpayer’s money together and find a way to solve this problem,” he said. “We have already begun these discussions and I hope that next year’s budget process is a collaborative one with everyone pulling together and making the required sacrifices to solve the budget deficit.”
“Whether folks have been born and raised in Blount County or have moved here for whatever reason, Blount County is simply a beautiful place to live, raise a family or retire,” he said. “I’m optimistic. I think there’s going to be a turn around. The people before us made Blount County what it is.”
McGill and Associates sponsored the three Chamber briefings held to update members regarding Maryville, Alcoa and Blount County governments. Greg Eidam II, a senior project manager with the company, was on hand at the Blount County government briefing. “This is a very important community to us and we value the long term relationships and its important to support these relations and this community,” he said.