Farragut’s Board of Mayor and Aldermen approved, on first reading Thursday, May 28, a leaner budget for the upcoming fiscal year — one that reflects expected diminished revenues, yet would provide a continuation of services and new staff positions.
The 2020-21 budget “is unlike any other,” said Town administrator David Smoak as he presented the document and a lengthy report to BOMA, still meeting electronically per Gov. Bill Lee’s orders.
While Smoak and Town officials have a reputation for lean budgets, Smoak said the 20-21 budget “is extremely conservative. We ratcheted back our expected revenue and our expenditures.”
As approved, the Fiscal Year 2021 Budget shows anticipated General Fund revenues at $10.890 million — a 7.2 percent reduction from initial estimates — and expenditures at $7.594 million.
As the pandemic shut down businesses beginning in March, Smoak said he and staff began revising both the current fiscal year budget and the proposed FY0 2021 budget.
“Both were reduced substantially due to the ending sales tax revenue shortfalls the Town would be incurring due to the COVID-19 pandemic,” Smoak reported.
“We truly are dependent on sales tax — how well our economy does is how well Town of Farragut does.”
After adjustments were made, the current 2020 FY budget estimate of $11,738 million in revenues reflected an anticipated 9.6 percent reduction, as well as additional revenue reductions in recreation fees (since the Community Center and playing fields have been closed), building permits and wholesale alcohol taxes.
“Sales tax revenue is estimated to be flat from FY 20, at $5.926 million,” Smoak said, noting that amount “accounts for 54.4 percent of the Town’s total revenue.
“So with local sales tax, we also receive state sales tax based on population,” he added. In recent years, the amount has been $142 per person, with $104 going to the General Fund, and the remainder into State Street Aid.
“We just got the numbers … estimating they will be down to about $131 per person, with $98 to general fund. That will be about an $187,000 hit to General Fund.
Smoak said the Town’s building permit and license revenue would bring in about $381,000 to the current Fiscal Year. “And while there has been residential constructor we don’t anticipate getting a lot of new commercial (businesses) next year,” he added.
Smoak also asked department heads to cut back on their budgets, to the tune of about $300,000 in total, to provide for employee staffing needs in Engineering, Public Works and the Community Center.
The budget does not call for any staffing cuts, but also does not provide for any merit-raise increases. He also noted employee health insurance costs will be increasing by just beyong $100,000 over FY 2020.
“The overall general fund budget projects $3.6 million in revenues over expenditures for FY 21,” Smoak added.
“We will also be funding our rainy-day fund at a total of $2.185 million and project an available fund balance at the end of the FY 21 budge year to be $17.7 million.
“Although we are in the middle of a global health crisis the likes of which no one has seen in their lifetime, the conservative budget principals the Town of Farragut has maintained will allow for us to make it through this crisis with minimal impose to our currently serve levels to the community.” Smoak’s report concluded.
In other business:
BOMA also approved unanimously on second reading postponing collecting the Hotel/Motel Occupancy tax by three months. It will now go into effect Sept. 1.