Crossville Chronicle, Crossville, TN

Area News

December 17, 2009

City manager takes issue with sales tax drop story

A recent story published in the Crossville Chronicle last week about sales tax collections coming in below estimates and how that affects local budgets has drawn a response from the Crossville city manager.

In a letter to the Chronicle publisher, City Manager Ted Meadows clarified city actions that were taken in anticipation of a sluggish economy. To address the anticipated drop in sales tax, the city council reduced its budget by ten percent.

The story reported city of Crossville Finance Director Fred Houston told the Chronicle the city has seen a 3 percent decrease in sales tax collections from 2008. The city did not budget an increase in sales tax collections for 2009-2010, Houston said. Current collections show the city could be down $180,000 for the fiscal year, but Houston said the city's general fund budget would be fine and reserve funds were available to meet a shortfall. The city collected $15,782 less from sales tax revenue in October 2009 than in October 2008.

Wrote Meadows, "When I read your front page article, "Sales tax revenue below budget" in the Chronicle, I found that the information give by Crossville City Finance Director Fred Houston, and published in this article, was factually incorrect.

"Through the first six months of the city's fiscal year, sales tax revenues are down $314,410 or 10.6%, as compared to the same six months in the previous fiscal year. In the case of the city, the mayor and city council recognized the weakness in the economy and approved a budget for fiscal year 2009-10 that included a ten percent $700,000) reduction in sales tax revenues for this year. To offset the projected loss in revenue, the operating budgets of the city were reduced accordingly, and the base salaries and wages for all city employees were frozen until, or unless, there is a recovery in revenues.

"Increases in compensation have continued only in the event of promotions and wage adjustments in the cases of some employees whose base wages were below the minimums in the city's wage matrix. Fortunately, this recession, or slowdown, has not included the inflationary pressures that would cause erosion in real wages.

"Through the first six months of this fiscal year the city has received $3.246 million in sales tax revenue against a budgeted $3.250 million. We are in a virtual break-even to budget. As we enter the second half of the fiscal year, the economy appears to be improving and it is our hope that the prosperity continues into the New Year and that Crossville can continue to grow and to prosper."

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