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Council approves budget with no tax increase, more money for schools

Posted at 9:44 pm June 6, 2016
By John Huotari Leave a Comment

Note: This story was last updated at 12:15 a.m.

The Oak Ridge City Council approved a budget on Monday that does not include a property tax rate increase, but it does include more money for schools and it anticipates increases in the trash fee and water and sewer rates.

The budget passed in a 6-1 vote in the first of two readings this month. The second and final reading is Monday, June 13.

Council rejected one motion to lower the $2.52 property tax rate by 4.4 cents and another to take away the additional $538,048 requested by Oak Ridge Schools and put it into the capital fund instead.

The budget does not increase the property tax rate for the ninth year in a row. After five-year reappraisals last year, the rate is now set at $2.52 per $100 of assessed value.

As approved on first reading Monday, the budget includes a 3 percent pay adjustment that will move municipal employees along their pay scales, helping to separate those who have worked for the city for a while from those who have just started. The school budget, which was approved by the Oak Ridge Board of Education in May, also includes 3 percent salary increases.

The trash fee would increase by $3.50 per month, raising it from $10.50 to $14 per month, starting in October. The fee was raised to $10.50 last year. At $14 per month, the city would no longer subsidize part of the trash fee, as it has previously done. The city used to pay half of the $14 fee, meaning residents paid $7 per month and the city paid $7.

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Water and sewer rates are expected to go up 6 percent in January 2017. Those rate increases have been delayed from January 2016. They are part of a study done about three years ago. (See a few previous stories here and here.)

After the proposed amendments were rejected Monday, the budget that had been proposed by the city staff was approved without changes in a 6-1 vote. Council member Trina Baughn cast the only “no” vote.

Council member Rick Chinn made the motion to lower the property tax rate by 4.4 cents. It failed 3-4. Voting in favor were Chinn, Baughn, and Council member Chuck Hope. The other Council members voted “no.”

The $3.50 per month increase in the garbage collection fee is expected to increase revenues by about $376,902. That’s the equivalent of about 4.4 cents on the property tax rate, and Chinn said he wanted Council to reduce the tax rate by that amount.

But other Council members opposed to a tax decrease said the city has a lot of capital and maintenance needs, and that’s where the additional $376,000 or so will be spent.

“I think our capital needs at this time are too great,” Gooch said. “I think we would be creating a bigger problem.”

Among the capital needs he cited later were the water plant, roads, and city and school buildings.

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Oak Ridge City Manager Mark Watson cautioned Council members to be careful about lowering the property tax rate because once you lower it, he said, it’s really hard to bring it back up.

Baughn and Chinn argued that the cost of living in Oak Ridge has increased, and Baughn said the city is the second-highest taxed municipality in East Tennessee.

The motion to amend the budget to reduce the general fund by about $538,000, which is equal to the additional amount requested by the schools, and put that money into the capital fund instead also failed 3-4. Voting in favor were Oak Ridge Mayor Warren Gooch, who made the motion, and Baughn and Chinn.

The extra $538,048 the school board requested from the city this year is a 3.6 percent increase in municipal funding for the schools. But officials said the extra $538,000 money is for one-time, non-recurring expenses, meaning education officials shouldn’t expect it in their budget next year as part of the so-called “maintenance of effort,” a level of funding that can’t be reduced.

Gooch said his biggest concern with the extra money allocated for Oak Ridge Schools was making sure it wasn’t considered part of the city’s “maintenance of effort” for school funding, which would require that the city would have to keep giving that money to the schools each year. He wanted assurances from state officials that the $538,000 won’t be counted as part of the city’s maintenance of effort.

If approved on second and final reading, most of the extra money for the schools will be used for a one-time payment of $425,000 on a four-year lease on infrastructure and technology for a program that provides convertible laptops to students, and the other $113,000 or so will be used for underground piping at Oak Ridge High School, lockers and elevators at Jefferson Middle School, and a road at Robertsville Middle School, Watson said.

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Oak Ridge typically provides just under 30 percent of the school system’s funding. The schools also receive state and federal funding, among other revenue sources.

The proposed city budget this year includes funding for items suggested by the Budget and Finance Committee, which is chaired by Council member Kelly Callison and includes Mayor Pro Tem Ellen Smith and Council member Charlie Hensley. Among the items: Funding of a compensation study and a new accounting software system, an additional housing/code inspector, funding of a senior center design, and support of a proposed city/school approach to a joint capital improvements program, or CIP.

During its roughly two-hour debate on Monday, Council debated whether the compensation study, which could cost up to $50,000, should be done in-house or by an outside expert. With the exception of Baughn, most Council members and Watson seemed to favor an independent professional consultant.

Gooch and Smith said the loss of the Hall income tax by 2022 is going to be a challenge for city budgets. Oak Ridge could lose up to $700,000 per year or more in revenues when that tax on certain stock and dividend income is phased out in six years.

Both Gooch and Smith, who is mayor pro team, cited steps being taken or emphasized the importance of a proposed new home for the Oak Ridge Senior Center and Oak Ridge Preschool. Both proposed projects would receive some funding in the budget for the fiscal year that starts July 1.

More information will be added as it becomes available.

Copyright 2016 Oak Ridge Today. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Filed Under: Education, Front Page News, Government, K-12, Meetings and Events, Oak Ridge, Top Stories Tagged With: budget, Charlie Hensley, Chuck Hope, Ellen Smith, Hall Income Tax, Kelly Callison, maintenance of effort, Mark Watson, Oak Ridge City Council, Oak Ridge Preschool, Oak Ridge Schools, Oak Ridge Senior Center, pay adjustment, property tax rate, Rick Chinn, salary increases, school funding, tax increase, trash fee, Trina Baughn, Warren Gooch, water and sewer rates

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