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Mayor Haslam presents the budget in 2007Mayor Haslam Presents the Budget

April 27, 2007
- Promising to show his audience the money Mayor Bill Haslam unveiled a 2007-2008 City of Knoxville budget Friday that includes millions for capital projects like new sidewalks, roads and neighborhood improvements - without a tax increase.

"We're not going to be asking for any extra money out of your pockets, there will be no tax increase this year," Haslam told a crowd of about 600 gathered at Caswell Park for the mayor's annual budget luncheon. "It's been a good year for our city and our state: sales tax collections are up, frankly sales tax collections are up across the country."

The mayor's proposed general fund - or operating - budget for FY 2007-2008 is $163 million, up 5 percent from the $155.2 million budgeted last year.

The proposed capital spending - for things ranging from roads, sidewalks and flood control projects to new fire trucks and computer software - is $37.3 million.

"I'm excited about this budget," Haslam said. "It's fiscally responsible and takes care of many of our needs and wants."

He said that Knoxville is operating in the black and won't have to dip into the general fund balance - essentially the city's savings account - to fund the 2007-2008 budget.

Knoxville should end fiscal year 2007 with about $36 million in the general fund balance, more than double the amount there in 2004, Haslam's first year in office. 

The mayor said the city has done a better job each year of controlling its expenses, though it will always face a difficult task in trying to raise enough revenue to match expenditures.

The city, for example, only keeps 28 cents of every dollar it collects in sales taxes. The rest, totaling $97 million, goes to the Knox County School System.

Using pie charts displaying "Where the Money Comes From" and "Where it goes," Haslam walked the audience through the proposed budget.
He said the city's main source of revenue is from property taxes, which account for nearly half of the city's funds. Sales taxes provide another quarter of Knoxville's revenue.

On the spending side of the ledger ensuring the safety, security and well being of Knoxville's citizens is the city's biggest expense.

Nearly half of the operating fund budget is dedicated to supporting the efforts of the men and women of the Knoxville Police Department and Knoxville Fire Department.

Another substantial chunk of the budget is for the city's Public Service Department, which maintains sidewalks, roads, right of ways and makes sure the trash is picked up among its many missions.

The city will also pay $8 million to subsidize Knox Area Transit, up 10 percent from last year. Over the last four years the city's funding for KAT has increased from $5 million to the current $8 million.

Haslam said operating budget spending would increase by about $7.5 million this year.

A little more than $4 million of that is for employee-related costs. That includes a three-and-a-quarter percent raise for employees and helps cover increases in health care and pension expenses.

Knoxville is also increasing the amount of money aimed at helping its neighborhoods, including the creation of the new position of Neighborhood Coordinator. He or she will operate as a liaison between city government and neighborhood organizations to improve both.

Most of the $37 million in capital projects is aimed at making Knoxville a better place to live and work by increasing development in the city while making its neighborhoods stronger at the same time.

Other capital funds will be used to improve city facilities and to buy new equipment.

Haslam said Knoxville is a city of neighborhoods and initiatives that improve a neighborhood therefore make the entire city stronger.

"I believe that the investments we make in development enhance our neighborhoods and the investments we made in neighborhoods create more development," he said, "which also creates a greater tax base, so we can keep your taxes low."

"It's critically important to invest in both," he concluded.

Among capital budget commitments are:

• $4.5 million for paving 40 miles of roads
• $2 million for the construction of new sidewalks and the repair of existing ones, including an ambitious project on the 100 block of Gay Street
• $1.2 million for flood control work along First Creek in North Knoxville. The city has already committed $3 million to the project.
• $10 million for the South Waterfront Project with most of the money going for infrastructure improvements needed to be in place for private development.
• More than $1 million to clean up or buy problem and blighted properties and to support new construction of affordable housing for citizens of modest means.
Other projects include money for the planning stages of Cumberland Avenue redevelopment, improvements to the I-275 Business Park and a better communications system for the KPD.

"As I present my fourth budget address and complete my first term in office, I'm more convinced than ever that we're moving in the right direction," Haslam said.