Wednesday, April 23, 2014

Mayor Rogero says city facing tight budget, rising pension contributions

Mayor Rogero
Knoxville Mayor Madeline Rogero’s budget for the upcoming fiscal year must somehow close a roughly $10 million gap tied to rising personnel and pension contribution costs, and yet also find ways to pay for capital improvement projects and reinvestment initiatives designed to enhance the city’s quality of life.

To do that, the mayor will more than likely be forced to either raise taxes, dip into the city’s reserve fund or cut services, she said.

Rogero will unveil her proposed budget for the upcoming fiscal year at noon Thursday at Christenberry Ball Field in North Knoxville. The City Council will then hold budget hearings on May 21 in the Main Assembly Room of the City County Building. The spending plan must be approved by June 30, the last day of the current fiscal year.

“We’ve had some challenges in addressing the budget this year,” Rogero said. “It’s no surprise we have a big unfunded pension liability . . .  and it’s something we’re obligated for and something we have to address.”

Residents in 2012 approved changes to the city’s pension plans, voting in a hybrid plan that combines a traditional defined benefits pension with a defined contribution component.

Still, the city isn’t expected to see any savings for decades.

In the meantime, the budget that Rogero will present on Thursday has to cover some $23.4 million in pension contributions – up $7.4 million from the current fiscal year.

The budget also must include an additional $1.7 million to cover a 2.5 percent raise for roughly 1,600 employees, a salary increase that is guaranteed each year under the city’s code.

And, the city needs to find another $700,000 for increased health care costs.

In addition, Rogero noted that “inflationary costs” tied to buying equipment, supplies “and quite a bit of purchasing that we have to do to run a government this size” also have jumped.

“On the capital side there are many projects that people want in our city – things like greenways, sidewalks and bicycle facilities, road improvements, intersection improvements, street paving, garbage pickup – all the different types of things that we provide to the city,” the mayor said. “So, we look at the operating side and the capital side . . .  and from there we look at what is realistic and try to establish a budget around that.”

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