Cleveland, Tenn.: Budget action awaits court decision

Cleveland, Tenn.: Budget action awaits court decision

March 15th, 2011 by Randall Higgins in News

Janice Casteel

CLEVELAND, Tenn. - Before adopting a new budget, the Cleveland City Council is waiting for an Chancery Court decision on a sales tax revenue dispute between the city and Bradley County.

The decision is expected in April.

City voters approved a half-cent sales tax increase two years ago. Voters were told the money would be put in a fund and used for capital projects, including street paving.

The county sued to collect part of that fund, and the city has contended the money belongs only to Cleveland.

The money, now held by the county trustee, amounts to $689,980.

All other sales tax revenue, except proceeds from the half-cent tax, are shared with the county based on an agreement made in the 1960s.

Council members went to work on the budget for fiscal year 2011-12, which begins July 1, at 8 a.m. Monday and stopped just before their regular 2 p.m. and 4 p.m. meetings began.

If all the department budget proposals were funded fully, the city would require a 22.5 cent tax increase per $100 of assessed property value, City Manager Janice Casteel said.

Council members backed away from that idea. But the city does need increased funding - up to a 6 cent property tax increase - to meet obligations already made, Casteel said.

Paying the debt for a bond issue approved this year requires $635,000, which would be covered by the 6 cent increase, Casteel said. The $7.2 million bond issue includes $3 million for a new industrial park and more than $1.8 million as local matching funds for APD 40 highway connectors to the proposed industrial park.

"The part we have to have is debt service," Casteel said. "I have to have what's on that bond issue."

Future bond issues should include sources of revenue in the motion voted on by the council at the time of the issue vote, Councilman David May said.

Raises for city employees are another major council concern. The school system's budget includes a 3 percent raise. The Cleveland Utilities budget includes a 1.5 percent cost-of-living increase and a 2.5 percent merit increase.

If all city employees are not getting raises this year, council members said, no city employees should.

If those raises are approved, "what do you think the general mood would be?" Councilman Richard Banks asked Casteel.

"Our employees have been thankful they have a job," she said. "They have watched as we made certain the necessary jobs are kept. ... Would they pout and be moody if they didn't get a raise? No. But I think if you do allow Cleveland Utilities to give raises, and you fund raises for schools, then that's when you will have a morale problem."

Banks said, "In the private sector, very few people are getting raises right now."

Councilman George Poe said he's "going to have to hear more than I have so far before I can support a tax increase."

Contact Randall Higgins at rhiggins@timesfreepress.com or 423-314-1029.