The town of Signal Mountain is taking another look at its FY2019 budget. The related public hearing and second reading were postponed at the town council's July 9 meeting.
Councilman Dan Landrum, the only councilor not present for the council's May meeting when the budget was passed unanimously on first reading, said he was concerned that the proposed budget would drop the town's general fund balance below 35 percent of the total budget.
In 2011, the town adopted a policy of maintaining a fund balance equal to at least 35 percent of the total budget.
The ratio of the general fund balance to the total budget varies from place to place, but the widely accepted recommended minimum amount is the equivalent of three months' operating expenses - and 35 percent is well above that, said Town Manager Boyd Veal. In the case of an emergency, he said the $4,554,300 in the general fund as of June 30 would cover only the town's operational costs, but last well beyond three months.
"We would most likely not be looking at capital investments during that period," he said of the hypothetical emergency situation.
Veal said the fund balance will be about $300,000-$400,000 higher than was anticipated when the originally proposed FY2019 budget was passed in May. Veal said he couldn't identify the specific reasons for the increase until he completes a line-by-line audit of the budget.
On top of that increase, funds allocated in the FY2018 budget for renovations to the Mountain Arts Community Center and a playground on Timberlinks Drive that weren't spent in FY2018 will be rolled into this year's budget.
In addition to the general fund balance, Landrum also took issue with the council's choice to inflate the upcoming fiscal year's property tax revenue. The originally proposed FY2019 budget raised the anticipated revenue by 1 percent over FY2018. However, at the suggestion of Mayor Chris Howley - and against the recommendation of the town's two Certified Municipal Finance Officers, Veal and Finance Director/Recorder Carol White - the council decided the budget should reflect a 4 percent increase.
The town has continuously underestimated its revenues by an average of 7 percent and overestimated its expenditures by 8 percent since 2012, said Howley, as to why he suggested raising the projected property tax revenues by 4 percent.
"Budgeting is not an exact science," Howley said. "I'm very comfortable that we had underestimated revenues and overestimated expenditures."
Councilman Dick Gee said part of the problem with this year's budget was the necessity to bring on additional firefighters in the middle of the last fiscal year in order to staff the new fire station on Shackleford Ridge Road, an unbudgeted expense which the town was obligated to make in order to provide fire services to annexed citizens in the Fox Run and Windtree subdivisions. He advocated for a small tax increase for that reason, he added.
Councilwoman Amy Speek suggested they revisit the budget for FY2019, which Howley said he wasn't against, though both said they were against a tax increase. Landrum made no comment in regards to a tax increase.
The council agreed to table the vote on the FY2019 budget and take another look at their next agenda work session July 27, instead passing a continuation of the FY2018 budget on second reading in order to allow for that time. The council's agenda work sessions are open to the public, though they generally do not include a citizen's comment period.
Budget documents will be posted to the town's website as they become available, said Veal.
Email Emily Crisman at ecrisman@timesfreepress.com.