JONESBOROUGH, Tenn. (WJHL) — Washington County’s budget committee worked through the fiscal 2024 budget Monday morning and plugged a $10 million gap between revenue and expenses that allows the county to avoid a tax increase.
The budget includes across-the-board $2 hourly raises for nearly all county employees. That will mean raises of 10% or more for all employees currently making $20 an hour or less.
Budget committee members balanced the budget partly by recommending that the county keep an estimated $4 million in sales tax revenue from a source that has gone to the county’s and Johnson City’s schools for about three decades now.
Both school systems now face the task of plugging their own roughly $2 million gaps after a move Johnson City School Board Chairwoman Kathy Hall said caught her system unaware.
“We’ve passed our budget this year,” she told News Channel 11 after attending the meeting.
Hall said the decision disappoints her, adding that while county commissioners had discussed the same potential revenue adjustment two years ago, she said the topic “was not on our radar” this year.
Currently, the county allocates half of its 2.5% “local option sales tax” revenues to the school systems and keeps the other half for the general government. If adopted by the full county commission, Monday’s recommendation would see all that money (about $8 million this fiscal year) staying in county coffers starting July 1.
“We as a board have not had a chance to discuss how we’ll fill a $2 million hole if that happens,” Hall said.
Committee members and County Mayor Joe Grandy unanimously approved the recommendations for the general fund and other budget segments. In addition to the sales tax change, they finished plugging that $10 million general fund with a $4 million transfer from the county’s capital projects fund and a $2 million transfer from its water line expansion program.
Only the $4 million is recurring funding, so coming up with another $6 million if the budget were flat next year would require a 17-cent tax increase (the current rate is $2.15 per $100 of assessed value).
To balance the budget without changing the sales tax allocation would have required about a 28-cent increase.
Budget committee members pulled no punches about the fiscal challenges facing the county and the high likelihood that the decision to hold the line on taxes this year is a one-year solution.
“Every year is different and the numbers come in different, but you can see how things are trending,” budget committee member Ben Carder said. “I think it’s been pretty amazing they’ve made it this long without (an increase).”
Jim Wheeler, the longest-serving current budget committee member aside from Grandy, said he has been pleased to see the county administration find ways to balance the budget without proposing a tax increase. But he added, “it’s gotten harder every year.”
Hall, who was in attendance along with fellow board member Beth Simpson and Johnson City Superintendent Steve Barnett, said the decision seemed like “a step backwards” in a year that has seen historic investments in K-12 education at the state level.
“I understand that this is an investment that the county made a long time ago and they’ve kept it up for many years, and I think that county taxpayers have grown accustomed to making sure that education is funded.”
Grandy said Washington County is unique among the state’s 95 counties in not keeping all the local option for general government. Commissioners made the 50% allocation official in a 1990 resolution, ostensibly to deal with budget difficulties, something that it’s doing now in the reverse.
Hall said that the city schools will have to go back to the table in the coming weeks and figure out whether or not to keep their funding levels the same by dipping into what is currently a $15.8 million fund balance or taking a mixed approach.
“We really will have to either look at cutting some programs or funding, or using money out of our fund balance for ongoing projects,” Hall said. Using fund balance isn’t a sustainable option, she said, because the funding loss is recurring.
“Making a change like this that will not only affect this year but next year and the year after really is something that is going to have to be made up somehow,” she said.
Employee pay hikes benefit low-wage workers most
Much of the general fund budget increase is a result of rising salaries over the past several years as the county has struggled, along with many other employers, to retain and recruit employees. The new budget, if passed as recommended, provides higher percentage raises to the county’s lower-paid because it’s a flat rather than a percentage increase.
The county’s average salary is $43,557 a year, and half of the 484 employees make less than $39,229.
The 31 employees currently earning less than $30,000 would see raises of at least 14%, while the 225 who earn between $30,000 and $40,000 would have their pay increased by between 10.4% and 14%.
The full County Commission has a called meeting June 22 to vote on the proposal.