The Oak Ridge City Council approved a budget with no property tax rate increase on Monday.
If the budget is adopted in a second and final vote next week, it will be the 10th year in a row without a tax rate increase in Oak Ridge.
The Council had been asked to consider a four-cent increase in the property tax rate in order to fund a 2.5 percent pay raise for Oak Ridge Schools teachers and staff. That increase would have pushed the city’s property tax rate to $2.56 per $100 of assessed value. But that request was denied.
Instead, Council voted 4-2 to keep the tax rate at $2.52.
But Council did agree, in another 4-2 vote, to give the schools about $538,000 in additional funding that the city agreed to provide on a recurring basis. That means the city will have to continue to provide that extra money in the funding that it transfers to Oak Ridge Schools each year as part of what is known as maintenance of effort. The city had also given the schools an additional $538,000 last year, but it was on a one-time basis for a digital device initiative that includes convertible laptops for students, among other expenses.
This year, members of the Oak Ridge Board of Education sought to make that $538,000 a recurring part of the school system’s funding, and they wanted to add another $318,000—or about $856,000 total—for the 2.5 percent pay raise for teachers and staff. Council members approved the first part of that request (the recurring $538,000), but not the second (the extra $318,000).
Council members suggested the new $538,000 that they did approve would be enough for about a 1.5 percent pay raise. However, under the Oak Ridge City Charter, the City Council can not tell the school system how to spend its money.
If the budget approved by City Council next week includes only the new $538,000 in recurring funding, but not the extra $318,000, the Board of Education will presumably have to meet again to revise its budget. The school board adopted its budget in May with the $318,000 included.
Council cast five votes on the city budget during a three-hour discussion on Monday.
The first motion, by City Council member Ellen Smith, was to keep the tax rate at $2.52 and make the $538,000 recurring. That motion failed 2-4, with Smith and Oak Ridge Mayor Pro Tem Rick Chinn voting “yes.” Four other Council members—Kelly Callison, Jim Dodson, Chuck Hope, and Hans Vogel—voted “no.” Oak Ridge Mayor Warren Gooch was absent.
A second motion, which only addressed the tax rate and kept it at $2.52, passed in a 4-2 vote. Voting for that motion by Vogel were Chinn, Hope, Smith, and Vogel. Voting against it were Callison and Dodson.
Callison said he wanted at least a 2 percent pay increase for the schools, and Council should vote for the four-cent tax rate increase. Dodson agreed.
The four-cent increase, if approved, would cost the owner of a $100,000 home an additional $10 per year. Each penny on the tax rate provides about $85,000 in revenue.
The third motion, by Smith, was to make the $538,000 recurring. It passed 4-2. Callison, Dodson, Hope, and Smith voted for it. Chinn and Vogel voted against it.
Next, in a 5-1 vote, the City Council set the transfer to Oak Ridge Schools at $15.493 million, the same as last year but with the $538,000 as recurring funding rather than as one-time money. Callison cast the lone “no” vote.
Finally, the budget itself, as amended by Council, passed 6-0. Oak Ridge City Manager Mark Watson has said it’s essentially the same budget as last year, with some capital improvements and funding for an energy savings plan for lighting, heating, and cooling systems in the city and schools.
As they considered how much money to give the schools and whether to raise the tax rate, City Council members were reminded that there are a few expensive projects looming, including the new Oak Ridge Senior Center and Oak Ridge Preschool. Officials have said the Preschool could cost around $10 million and the Senior Center could cost roughly $2.2 million, and the city could borrow money for those projects.
Besides those expected expenses, there are also some changes in revenue, including a reduced grocery tax and the phasing out of the Hall income tax, which will mean less money for the city.
The budget for the next fiscal year, which starts July 1, doesn’t include pay raises for city employees. But a compensation study is being completed and the proposed budget includes about $360,000 to help address potential pay increases that could go into effect after the compensation study is completed, possibly in October, Watson said.
The Monday night vote was the first reading of the municipal budget. Council could amend the budget on second reading, but it’s not clear yet that any member will try to make any more changes. The second and final reading is Thursday, June 15. That meeting has been rescheduled from Monday, June 12.
The city budget totals $196 million in all funds, including in the general, waterworks, electric, capital, school, and other funds. The general fund totals $23.2 million.
The city provides around 28-29 percent of the school system’s funding. Other major sources of funding are the county (somewhere around 28 percent) and state (roughly 41 percent or so). The schools also have some federal funding.
More information will be added as it becomes available.
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