Council approves city budget, withholds school money

Oak Ridge Board of Education Chair Keys Fillauer, right, presents the school system's budget to City Council members Tuesday. From left are Council members Jane Miller, Charlie Hensley, and David Mosby.

The Oak Ridge City Council unanimously approved a no-tax-increase budget Tuesday that withholds about $766,000 from the school system.

The school’s money will be held in reserve until education officials transfer revenues raised under an Anderson County sales tax increase approved in 2006. That money will be used to help pay down the debt on the $66 million renovation of the Oak Ridge High School.

School officials have argued they can keep that portion of the new sales tax revenues that are collected outside the city of Oak Ridge. Until recently, all of that money, as well as the revenues collected inside the city, were used for high school debt payments.

Disagreeing with school leaders, municipal officials have said the county sales tax increase effectively took away money from the city. They think the new county revenues, including about $250,000 generated outside the city, should be used for debt repayments.

They considered whether to ask school officials to delay their proposal for a year to allow further negotiations between the two sides, but that resolution was withdrawn Tuesday.

Before Tuesday’s vote, City Manager Mark Watson told Council members that Oak Ridge has to keep paying its debts to protect its credit rating.

“We have a contract, essentially, for our bondholders and people who have invested in our community, and that debt should be paid,” Watson said.

He said the Oak Ridge Board of Education agreed, in 2005, to follow the financial plan that, until recently, has been used to pay the ORHS renovation debt.

Watson said any Anderson County sales tax money transferred to the city from the school system in the next fiscal year, which begins July 1, would be credited to the school system.

Mayor Tom Beehan said school officials and attorney Chuck Cagle argued on Tuesday that the city’s move would put the school system’s budget out of balance, and they suggested it could violate maintenance-of-effort requirements. Watson disagreed.