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BUDGET 2010-2011
2010-2011 Proposed Annual Operating Budget [PDF] (3 MB in file size)
Listen to Mayor's Budget Speech [MP3]
Budget Info for 2010
Transcript of Mayor Bill Haslam's speech on the proposed budget

City of Knoxville's fiscal year 2010-2011

April 30, 2010
Island Home Park

Good afternoon, thank you for joining us on this, another beautiful day in Knoxville. We always appreciate the Knoxville Fire Department Honor Guard and its service. Ms. McKeen, what a terrific job on the Anthem.

I very much appreciate Vice Mayor Becker’s introduction. Bob has been a great partner in government and I appreciate his service and his friendship. And thanks to the young people from Tennessee School for the Deaf, right over the water, for their signing.

We are in the heart of the first district, represented by Nick Pavlis, who brings years of experience to this task. I want to thank Nick for leading the pledge. Nick is doing a great job and I appreciate very much the opportunity to work with him.

This will be my last budget address with my friend Mike Ragsdale serving as County Mayor. It has been a pleasure to work with Mike during our time together in office and I want to thank him for his service.

We are glad to be here at Island Home Park in South Knoxville. It has been my pleasure to hold these annual events around the city. This park, in a jewel of a neighborhood, represents so much of what is special about Knoxville. It helps anchor a community, bringing us together to walk, play, or just relax.

Governing in Good Times and Tough Times

When I came into office we were facing challenges, but, as we prepared our first few budgets we could assume that growth would continue. We knew that good times wouldn’t last forever, and while nobody fully anticipated the downturn, we were very cautious – both in estimating the revenues we expected and in recommending expenditures that were within our means and would help us realize our vision.

However, from any perspective these are tough times for government just as they are tough times for businesses and families.

How is the city doing? Our very conservative approach to budgeting and our emphasis on tight management have kept Knoxville in a relatively strong position, especially when compared to other cities. But there is no getting around the fact that we have to tighten our belts even more if we are to keep the City healthy over the long term.

I will be talking a lot about belt tightening this afternoon, but let's always remember that tough times make for great opportunities - opportunities to make hard decisions that will serve us well when times get better.

Right now I am going to do something different and talk a bit about where we are and how we got here. If a picture is worth a thousand words maybe a chart is worth a hundred, so I am going to get a little informal for a few minutes.

The challenge before us: Discussion of Charts

(1). Where does our money come from - VIEW CHART [PDF]
(2). Where does it go- by function of government - VIEW CHART [PDF]
(3). Where does it go – breaking out employee costs - VIEW CHART [PDF]
(4). Trends - sales tax - VIEW CHART [PDF]
(5). Trends - property tax - VIEW CHART [PDF]
(6). Trends- building permits - VIEW CHART [PDF]

Pulling in the reins – the 2010 - 2011 budget

Given what I have said so far, you are not going to be surprised that we are pulling in the reins on the city’s budget for next year. Fortunately, because we have been quite conservative in our approach, we are in a better position than most to weather the storm.

There are a lot of reasons for this. First, we have some incredibly hard working employees who have stepped up and done more with less. Second, I have had a very responsible City Council to work with over the last six and a half years. Third, and most importantly, our citizens have been reasonable and prudent in what they have asked of us. Together we have all helped to create a culture that respects a government that is small, efficient, and effective. We have all helped to create a culture of restraint.

I am committed to pulling back substantially at this point to avoid passing the buck to leaders and taxpayers in the coming years. It is essential that we do not look to the fund balance to carry us through.

And it is essential that we do not burden Knoxvillians any further by increasing the cost of government. We simply must learn to get by with less.

Once again we will not have a tax increase this year!

Keeping the Momentum

Here is the challenge. In these difficult times we must hold down expenses while maintaining the momentum we have established. We are committed to the provision of city services at the same high level. We will continue to use our 311 call center to provide those services in the most efficient manner.

We are continuing to build on our success in the core of the city. We have been particularly pleased with the progress downtown, where our efforts are paying off. Despite the down economy we have seen greater private investment in the heart of our city. This investment is providing real strength to our tax base.

Downtown has become our community gathering place for concerts, the arts, dinner on a patio, or just having fun. Now we can truly say that downtown is everybody’s neighborhood.

In this year’s budget I am recommending more funds to help the extension of our downtown, in particular, the Central Avenue - Gay St. corridor. This area rests at the center of our increasingly successful Downtown North area that is already attracting new businesses and providing economic opportunity to the heart of the city.

Energy and Sustainability: Getting ready for Recycling

One of our major emphases has been energy conservation and sustainability. When we are stewards of our environment we are also stewards of the dollars with which we are entrusted.

We are now in the process of implementing a major series of updates to city facilities that will save substantial energy and dollars. We are also reaping the benefits of being chosen as a Solar American City.

In August we will open our transit center. This beautiful facility will help make our transit system become a more pleasant and viable option for Knoxvillians. It is LEED certified - the standard for energy saving, and will feature both solar panels and a green roof.

Our commitment to energy conservation is already paying off. For example our new LED traffic signals are saving us $200,000 every year.

We are working on an important new service for Knoxville residents - a curbside recycling program. This effort has been aided by a grant that will pay for up to 20,000 containers. Our plan is to purchase the containers this year and begin implementing more efficient and cost effective ways of collecting and disposing of trash and recyclables. Curbside recycling will follow in July of 2011.

Certainly, recycling will have implementation costs. We are working hard to keep them as low as possible. Simply put, the time has come for us to move forward to conserve our natural resources and to keep from filling up our landfills when much of what we throw away can be put to productive use.

It is the right thing to do and this is the right time to take the first step. It will be a shorter step than I would have liked, but moving a bit more slowly will let us move forward without any added costs in the budget I am introducing today.

Employees: Our Greatest Strength and our Greatest Challenge

I am taking steps to build on what we have been doing for the last five years, even before the hard times began.

The people who work for the City have done a terrific job keeping our costs under control and finding ways to deliver services efficiently and effectively. We have been able to get the job done with fewer people – the lowest number of employees in 15 years. This has helped reduce the cost of government.

We simply must build the discipline of smaller government into the way we do business. We will ensure that the reductions we make during these challenging times cannot be easily cast aside when times get better. Leaving positions unfilled in this year’s budget will result in an immediate savings of over $900,000.

I do want to make it very clear that there will be no layoffs of people currently working for the city.

Because of our decisions we have the lowest property tax rate in 50 years. We have almost tripled our fund balance and reduced our debt by 25%. In the past three weeks we learned that our bond rating had again improved. All bond rating agencies now rate us at the second highest level possible. The actual size of this year’s budget is down over 26 million dollars or over 9.5% from the budget we presented two years ago..

The conservative approach we have followed allows us to recommend a 2.5% raise for our employees. This raise puts our employees in an unusually good position. Very few people are receiving any kind of raise this year and many have not in the last couple of years.

However, I am not recommending any pay increase for those who serve at the Director or Senior Director level. In hard times leaders should bear a higher cost.

Three years ago we committed to the Mercer plan, prepared with the involvement of the administration, City Council and representatives of employee groups. This plan, which was based on a market survey, put us on a path such that our employees are fairly compensated at the rate of their counterparts in peer cities.

We have already implemented the first two years. I am recommending that we phase-in the last segment over two years rather than fully fund it this year. Delaying the full implementation a bit does allow us to balance a very tight budget while ensuring that our employees are fairly compensated.

It is important to keep in mind that, despite our best efforts at projecting, government programs almost always cost more than we think they will. Our pension system, like most fixed benefit systems, has become increasingly costly to maintain.

However, it is imperative that we keep the pension fully funded and honor the commitments we have made to our employees over the years. Therefore I am recommending an increase of 1.5 million dollars to the pension fund. This assures that the pension is fiscally sound and brings our annual contribution to the pension fund to over 9 million dollars.

This year’s increased allocation to pensions, the 2.5% raise, the cost of the Mercer plan, and increases for benefits, commits 3.5 million additional dollars to employees for the upcoming year.

Toward a Culture of Conservative Fiscal Management

I learned something when I became Mayor. It is not just about the time we serve in office. We are in a relay race. We take the baton from our predecessor and eventually turn it over to our successor.

When it is my time to pass the baton, whenever that is, I want to make sure that the next mayor takes over a city in a strong financial position, with low debt, a healthy fund balance, and sound infrastructure – our roads, sidewalks, bridges, and parks.

Folks may not be aware of what we spend on items like flood control and street paving, but these investments are critical to our future. We are committed to fully funding these items.

Hard times are not all bad. They force us to set priorities, ask hard questions, and act responsibly. Together we have resisted the pressures that we all feel to enjoy the short term benefit of spending on often good programs, but programs we just cannot afford.

We have worked to reduce debt, manage resources wisely, and invest strategically to set the stage for growth in our tax base and reduce the burden on taxpayers. This budget positions Knoxville well for the next year and the years beyond.

Being mayor of a great city like Knoxville is a wonderful honor in any time. It is a particular honor to be mayor right now – to work with men and women who are committed to our city and its future. While these are tough times, they really aren’t bad times.

I am truly grateful to have the opportunity to serve as your mayor.

Thank you very much for coming today, and for caring about this city that we call home.
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