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Kingsport BMA to consider garbage fee, property tax rollback

Matthew Lane • May 10, 2016 at 8:00 PM

KINGSPORT – The Board of Mayor and Aldermen is considering a two-pronged approach in the funding of $3 million worth of One Kingsport initiatives – rolling back property taxes by three cents and creating a new $12.75 sanitation fee for all residents.

According to information provided to the BMA, a resident living in a $134,000 house (the median home value in Kingsport) would pay an additional $153 a year for garbage collection while saving $10 a year on their property taxes.

City Manager Jeff Fleming offered this proposal during a special called budget meeting Tuesday afternoon, coming at the request of the BMA in seeking funding options for the One Kingsport initiatives.

Kingsport is currently in the midst of its yearly budget process, having reviewed the capital improvement plan earlier this month and on Tuesday reviewing the city's general fund, One Kingsport funding options and the budget for public works.

The BMA has to approved the 2017 budget before July1 - the beginning of the next fiscal year.

Fleming presented a balanced budget with no property tax increase, a $16.6 million CIP, with a focus on fundamentals, including paving, beautification and technology infrastructure. The budget does add 22 new positions to the city and increases to water and sewer (about $10 a year for customers).

Not in the proposed budget was funding for $3 million worth of first year One Kingsport projects, which also includes beautification efforts and initial steps on bigger projects such as a large outdoor venue, upgrading Bays Mountain Park and creating maker-space downtown.

City leaders say the sanitation fee and rollback of property taxes would essentially serve two purposes - it would create a dedicated funding stream for One Kingsport projects and start Kingsport down the path of shifting sanitation to an enterprise fund (something that's been a recommendation from auditors since 1993).

The sanitation fee would generate $3.8 million annually, while the property tax rollback would cost the city $520,000, thus leaving $3.3 million. Take away $700,000 in the estimated loss of Hall Income Tax revenue and this leaves Kingsport with $2.6 million.

As proposed Tuesday afternoon, this figure would be split between the general fund (basically off-setting a third of the cost of garbage collection) and One Kingsport projects. City officials say the rollback relieves pressure on businesses that already pay more in taxes and improves Kingsport's financial position.

Even with the sanitation fee, the average home owner in Kingsport would still be paying less in overall annual taxes than in Bristol or Johnson City, city officials say.

Mayor John Clark described the move as good for business. Alderman Tom Parham said the measure is more equitable.

“I think we're on the right track, but I think we need to recognize that we raised taxes last year and the year before,” said Vice-Mayor Mike McIntire. “For some of us (a sanitation fee) is inconsequential. For other it's going to hurt and hurt significantly. There's a lot of people in that category and you're hurting the voters that vote for us.”

Two years ago, the BMA considered implementing a $5 monthly garbage fee and a four-cent property tax hike to balance a $2.3 million gap in the budget. Public feedback scuttled the plan and the BMA ultimately went with a 13-cent property tax hike.

The other increases referenced during Tuesday's meeting include the BMA setting the property tax rate higher than the state certified rate in 2013, and the recently approved power franchise fee – about $70 a year for the average homeowner.

“One thing I like is the solid waste fund operating like a business. I'm not comfortable with just a three-cent decrease,” McIntire said.

Alderman Tommy Olterman said he really believes Kingsport needs to get more in line with other cities.

“It could certainly get us revenue,” Olterman said of the sanitation fee. “We've got to do something and that'll cost a little more, if we do it the right way. Still, a lot of people are going to gripe that taxes are too high. This is what I think is the right thing for our city at this time.”

Alderwoman Colette George reminded the BMA when people are looking to move, they look at the property tax rate and when Kingsport raised taxes two years ago, that changed people's perception. George also pointed out that Kingsport saved $2.2 million last year, money that went to fund items originally cut from the budget.

“I think we need to roll back a little bit more...and we've already got money in the pipeline to fund a lot of things,” George said. “I'm more worried about the homeowners than the businesses. This is going to cost everybody.”

“I kind of like this,” said Alderman Darrell Duncan. “It's not dropping much and it's helping out businesses.”

Parham said the question is, will the BMA really fund One Kingsport and change our direction or stay where we are?

“I'm hearing from people, a large silent majority is we were bought in for what you want to do,” Parham said. “We've made a commitment to change the direction of the city. If we don't put our money where our mouth is, we're going to hear a lot from the people who elected us.”

The BMA plans to mull over the funding option and return next week with an informal consensus on the 2017 budget. City officials were asked to provide the BMA with talking points about the proposal in case the public asks them about it.

“For me...regardless of who you are...I see this as an investment in our future, a majority of our citizens would elect to pay $11 more a month and I see this as something positive for our businesses, would spark more economic development,” Clark said. “We're making investments in our city and quality of life is not free.”

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