Kingsport presents its Fiscal Year 2025 budget
The proposed budget is balanced and does not include a property tax increase
The City of Kingsport plans to start the new fiscal year with a balanced budget, no increase in the property tax rate and a strong rainy-day fund of more than $25 million. All this while overcoming unexpected financial challenges in the previous year, which had a $4.7 million impact on the city’s budget.
This information and more about the Fiscal Year 2025 budget was presented to the Board of Mayor and Aldermen last week during two public worksessions. The BMA heard presentations from city and education officials about estimated revenues and expenditures, capital projects, utilities and budget challenges for the coming year.
The Fiscal Year 2025 budget will be approved by the BMA on two readings – June 3 and 17 – and then go into effect July 1.
Kingsport’s budget is the guiding financial document for the city and includes many parts – the general fund (main operating and capital fund for the city), water and sewer funds, the school fund and several smaller funds such as solid waste, the Aquatic Center and MeadowView.
According to the proposed budget, the general fund stands at $99.6 million with a “rainy day” fund of approximately $25.5 million. Kingsport’s property tax rate will be unchanged at $1.9983 per $100 of assessed value and its bond rating remains strong at Aa2.
“Despite the hits we took last year, our upcoming fiscal year budget is solid, well-managed and funds all of the necessary services for our citizens,” said City Manager Chris McCartt. “We made the necessary adjustments to the budget and experienced healthy growth throughout the year, which resulted in us ultimately expanding our tax base.”
Budget priorities for Fiscal Year 2025 include a continued emphasis on the workforce (pay and benefits), education, economic development, infrastructure improvements and technology.
Paving in particular will receive significant funding next year with $3.8 million coming from the city, $2.5 million in MTPO (Metropolitan Transportation and Planning Organization) funds and $4.5 million from the Tennessee Department of Transportation.
Other budget highlights include:
- A 1% cost of living adjustment for all employees, along with funded step increases.
- No plans to issue capital improvement bonds this fall.
- No increase in health insurance costs.
- No change in the maintenance of effort for Kingsport City Schools.
- Revenue from investments injected more than $2 million into the budget.
- Just over $21 million in debt roll-off.
- $1.5 million from last year will be used for capital projects next year.
City leaders are recommending taking $3.1 million from the rainy day fund to cover several key capital projects – library renovation ($1 million), Bays Mountain Park and Brickyard Park ($500,000), and commercial/residential demolitions ($1.6 million).
Kingsport experienced two major impacts to its fiscal year budget last year – an appraisal ratio and a sales tax refunding.
The appraisal ratio, conducted every two years per state law, is designed to create equity between personal and real property. Last year, the study resulted in a loss of $3.8 million to the city’s general fund.
The second financial impact Kingsport dealt with happened when a local entity overpaid sales taxes in 2015, 2016 and 2017. As a result, Kingsport had $1.3 million refunded to the entity by the Tennessee Department of Revenue.
In response, the City Manager and the Budget Office restructured the budget to absorb the loss, noting that growth will offset nearly half of the projected $3.8 million loss for the coming year.
