Liveblogging: Council Budget Work Session


John Smith, Oak Ridge Board of Education Chairman, opened the meeting with an overview of the Schools’ budget for this year.

As a Board, we understand what it takes to provide a quality education. We do the best that we can, as a community, to provide the best that we can. John notes that he has some ideas that he wants to bring forth at the right time, but tonight is not the right time.,

Some of the factors that impact our budget are student growth, commitment to improve student achievement and graduation rates, increases in insurance, retirement, fuel, water/sewer, electricity, etc. We must provide competitive salaries and benefits, we’re facing flat sales tax revenues. We expect an additional 124 elementary students this year.

Children on FRPL have risen to 31%, class sizes have increased, special education needs have increased.

Employee benefit costs have increased, and our staffing ratios must meet state requirements.

The most common factor in our success is our teachers.

Our utilities costs are rising, and our fund balance is being eroded. This year, our unexpended funds from last year were spent on repairs to items less than $50,000, which are not included in the CIP (Capital Improvements Program).

Many of our elementary schools are at the state class size maximum, and failing to adhere to state class size standards costs $50,000 in fines plus the cost of hiring teachers to remediate the situation.

Over the last 12 years, there is a sharp difference in the rate that the city revenues have increased, versus the City’s appropriation to the schools.

Still, there is no school in Tennessee with a higher ACT average than Oak Ridge High School.

Expenditures for Special Education represent 11% of our budget. Federal funds represent only 2% of our budget.

We expect an increase of $997,410 from the State, counting on the Governor’s cigarette tax proposal. Since 1999, increases in BEP funding have been only on the basis of enrollment increases. With this increase in the price people are turning towards vape. Dragon Vape: Canada’s Best Vape Shop suggests that there has been a steady growth in the consumption of vape among adults which has proven beneficial for the vape shops.

Dropped from this year’s budget are Driver Education (except Summer School), adn the Volunteer Reading Coordinator (no, we’re not dropping a volunteer; we cut a staff position for the coordinator of volunteers, which pains me… ).

John Smith detailed the number of teachers to be added, and the corresponding schools and grade levels. Other staffing increases are one custodial or ORHS, 2 computer technicians, and a 0.1 ELL teacher.

$1.3M of non-recurring expenses will be paid from our declining fund balance, but this is the last year. David Mosby questioned whether there is that much left (above the required 3% reserve, but he was looking at a chart showing what will be left after the FY08 expenditure.

John noted that we just received word from Expansion Management Magazine of their Education Quotient Ranking, which is based upon graduate outcomes and community support of the school system. The EQ ranking is used by companies to compare school systems nationwide to evaluate the suitability of the workforce produced by local schools; Oak Ridge was the only system in the state to receive the Gold Medal designation — the highest awarded.

We do recognize the challenge that the City faces, but we ask that you support this needs-based budget.

Bailey notes that we now rank 8th in teacher salaries, but we rank 68th in benefits… our teachers’ take-home pay is NOT the highest in the state — not even close. We’ve tried to honor the City’s financial model, but we can’t offer the same services for the same dollars with expenses increasing. This is not a wish-list budget, and it does not move us forward.

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Mayor Bradshaw notes his concern with the schools’ use of a large amount ($1.3M) of non-recurring funds; this is the last year that could happen. If the City had to fund the additional $1.3M in fund balance, we would be looking at an 18-cent tax increase. “What are we going to do, and have you thought about the long-term impact?”

Bailey responds that this is a result of the schools’ adherence to the “no tax increase” financial model. If expenses are put off for a number of years, as they have been, then the cost is higher in the long run.

Councilman Abbatiello alleges that he provided a list of questions at the April 17 Budget & Finance Committee — an illegal standing committee in my view — and that the School Board refused to answer the questions. Chairman Smith reminded the Mayor of his earlier remarks, that it is Council’s role to allocate funding in lump sum, not to dictate or question how, within the school system, said funds are spent.

The flat property tax rate, combined with declining sales tax collections, has harmed the school system by causing us to use non-recurring funds on an annual basis.

Councilman Beehan asks if we can provide a number to him representing the local burden posed by unfunded State and Federal mandates. That figure is not immediately available, but Bailey says that we can discern the percent of this year’s additional costs that are imposed by unfunded mandates.

Abbatiello points out that he has a list of all the unfunded mandates on the City side, and that they are all covered within the allocated 4.1% growth.

Councilman Beehan asks if the Governor’s proposal to increase the state salary share back to 75% is included in the budget; it is not. if that change is implemented, it will be done using the same 40-cent cigarette tax, so it will replace the currently-budgeted increases in at-risk and ELL funding.

Liveblogging Council

At the request of Mr. Young, who had requested rezoning of 110A Newell Lane, the rezoning of that property (from R-1-A single-family residential to RG-1 — allowing horses) was removed from the agenda.

The Oak Ridge Boys — Steven Arcangeli, Scott Horton, and Scott Molony, who won the Siemens competition — led the Pledge of Allegiance. They’re on tap to be honored by a Council resolution in a few minutes.

A new ordinance was presented and passed to require a motor vehicle to be properly registered before operation on city streets, and to require that any person operating a motor vehicle have his or her driver’s license in possession, and to display it upon demand of a police officer. I think that’s already law, but by making it a city ordinance, the city can now collect the fines for associated violations.

A resolution approving the City of Oak Ridge "2007 State and Federal Legislative Agenda" was passed. The scope of the legislative agenda is in the Council packet, here. Tom Beehan expressed grave concern about the cable TV franchising proposals, as that could endanger the agreements that currently allow for broadcast of City Council meetings, School Board meetings, and channel 15 (dedicated to the schools) in general.

Next, the item we’ve all been waiting for — a resolution authorizing the City of Oak Ridge to borrow funds in an aggregate principal amount of not to exceed six million dollars through the issuance of General Obligation Bonds. It doesn’t mean that they will borrow those funds — just an authorization to do so should all the stars line up with the GBT/SuperTarget proposal. Jim O’Connor clarifies that the City WILL NOT present any funds toward the project until and unless a contract is signed with Target in particular — as well as the City’s getting the names of the companies that will be co-locating there. Having learned from the Mall fiasco, no money will be released until the City sees the actual contracts with actual tenants, along with a long enough lease term to support a reasonable return on investment.

The City funds will really be a reimbursement, so the site development will actually occur prior to the release of any City funds.

Abbatiello is concerned that the resolution that Council is presented, does not name the particular project. O’Connor explains that further Council approval will be required prior to the release of any funds, but that if another project came forward, the funds could be redirected to any other infrastructure improvements project. Abbatiello says it’s misleading that all the GBT/Crestpointe people are here, but that the resolution isn’t specific to that project.

Abbatiello says he hasn’t decided whether he’s for or against this project (then gee, why does he sound so grumpy?). He says we’re not talking about Crestpointe, not talking about Target, not talking about the map on the screen. Abbatiello says we’re simply talking about whether to go further into debt.

Beehan says he feels like the Target project is the reason we’re here. The financial studies do show there’s good reason to consider this proposal, even at the cost of additional debt. Of course, the financials are all estimates, but they’re very good estimates — industry standards, not something that GBT made up. Further, the TVA study shows leakage of $20M going outside of town to shop now.

Our whole economy inside of Oak Ridge is heavily reliant on others in our region; just look at the license plates on cars at Wal-Mart, at Methodist Medical Center, etc.

Beehan asks why this development is not taking place at the Mall. O’Connor says they’ve looked at the Mall, at the old Food City shopping center on Illinois, at a site on Edgemoor Road, and on the east end of Oak Ridge. The Mall is impractical because of the deed restrictions; Edgemoor Road because of the wetlands; the Food City center is too small (they want complimentary retailers adjoining).

Although Pine Ridge is a difficult (and expensive) site, it’s the only unrestricted 60 acres along Illinois Avenue.

The GBT rep (Greg?) clarified that this proposal isn’t only about Target — this is a whole development of upscale retailers. Whee!! Upscale!! I know that doesn’t excite one segment of the population, but there are a whole lot of us out here who might actually buy something not made in China. Some of us actually look at the fiber content and thread count of sheets before we buy them. But don’t think it’s a snob thing — the Target circular I read while throwing away junk mail today contained a bunch of real bargains.

Steve Jenkins shows the chart, once again, showing the relationship between sales and property taxes. When sales taxes revenues increase, property taxes decrease. When sales tax revenues decline (as they have for several years), property taxes go up (as they have, or services were cut).

Jerry Kuhaida (former Mayor) finds the resolution confusing. O’Connor clarifies that a second resolution will be presented to Council on March 19, authorizing disbursement of up to $10.5M to the IDB to further this project. Even if this resolution passes tonight, additional resolutions will be required.

Steve Jenkins says we don’t anticipate actually borrowing any money until much further in the process; we don’t want to begin paying interest any sooner than we have to. We have our own reserves, so we’ll be using those funds before borrowing anything.

Fred Stephens says he hopes we do get a Target here, but he doesn’t think we have to do it right now — they should be able to proceed and give us time to solicit some assistance from the County. He thinks it’s too much money, and we can get a better deal. Stephens also asks why National Fitness Center’s property tax is lower than projected, and how we could be that far off from last August.

The answer to the first question is that getting into Target’s decision queue is driving the time frame. On the issue of assessed value vs. development cost, the property value is driven by a State formula, which incorporates values of like properties all over Anderson County. Unfortunately, it doesn’t matter what they invest — in assessing retail property, it’s based more on comparables than on actual investments. However, this development will drive up the assessed value of all retail property in the county.

This meeting is going very long, already. It’s about 90 degrees in the Council room. Wish I had an iced cappuccino.

Emily Wetsel speaks next, complaining that the resolution is nonspecific — for "infrastructure development" — when we all know we’re talking about the Crestpointe development. She accuses the City of getting it’s financial information from Target, complains about the impact on her neighborhood (Woodland), traffic, etc. She wants an opinion from someone who’s unbiased, obviously still angry about the "scalped" ridge.

Mayor Bradshaw clarifies that the State requirements for a municipal bond resolution are very specific, and this resolution is structured in accordance with State law.

Tim Holt speaks next, spouting the same stuff as before — sounds very much like DFET (Democracy for East Tennessee) has structured their talking points and lined up their speakers. It’s been going around on their listserv already.
Bill Schamm, the guy who promised a referendum, comes next. He decries a public subsidy for a private corporation. He wants Council to call for the referendum (so he doesn’t have to put on the petition drive).

Francis Colvais sees this as another opportunity, and says he hopes that we don’t lose it. Finally! "I don’t view this as a rush; there’s been a lot of work put into this. It’s already flattened — let’s put it to good use."

Ellen Smith, Council Candidate, urges Council to defer the vote in order to consider the borrowing resolution in conjunction with the development proposal. She feels this is the wrong proposal for Oak Ridge, in spite of the pent-up need for additional retail. She says this proposal isn’t about Target, and thinks we can bring Target here on our own terms.

Glenn Zahn says he’s "very for" this process going forward, that it is the right thing to do. As the owner of a staffing company, he sees the inability or delay in making decisions as being a detriment to a business owner. He asks about the potential for getting the County to contribute, and Mayor Bradshaw announced that they plan to participate in a work session next Tuesday on this very topic. However, the Mayor clarifies that we’re already capturing 75% of what would be County property taxes to defray the bond issue, but they may be able to do more.

Parker Hardy, as President of the Chamber of Commerce, tells of working with GBT over several years, engaged in a site search involving a variety of possible locations. Oak Ridge is in the third year of declining sales, a 5.9% actual loss is spendable dollars for Oak Ridge. It’s reasonable to assume that this development would recapture some of the sales tax leakage, and he urges Council to move forward.

Chris Wieland urges Council to slow down and re-think funding this process, pointing out the current vacant retail areas.

Ray Garrett supports the idea of subsidies or support for retail development. Although he’s not certain that the present proposal is the right one, he does ask Council to go forward with the bond resolution and do something… maybe buy the mall and lease it out at the minimum rate in order to get retail in. Another thought is to buy the property along Illinois where there used to be a sawmill, a driving range (and a dump before that).

Jim Cape points out that just a few years ago, he thought that Home Depot would be a dumb idea. He was wrong. The second critique he’s heard is that of geology, but Home Depot overcame that problem. The third concern he’s heard is the $10.5M, but this isn’t a housing development — it’s retail, generating money for schools and city services. "I think you’re voting for the future, and we need it very much."

Thomas Tucker insists that people from Solway and Hardin Valley are NOT going to come into Oak Ridge, because the traffic is too heavy (he lived in Solway for 16 years). He claims that the "real cost is $21M, not ten and a half."

Elizabeth Davis says her family came here for the schools, and found what they were looking for. The growth in Oak Ridge is "heartwarming." Oak Ridge is a "little southern," moving at a slower pace. She expresses her gratitude for the Council’s work on this project, and urges them to move forward.

* * *

Bradshaw: the actual assessed property value is up 20% since 2000, and the tax rate was reduced 7 cents. We’re no longer at the top of the list in property tax rates. However, operational funding for our schools is a continuing issue, as well as the expressed dissatisfaction with our lack of shopping opportunity. Because school funding is so closely tied to sales tax revenues, our lack of retail is hurting the City and the schools. We’ve got to re-learn our shopping habits.

We’ve got to be serious and reverse this trend.


City Council Meeting, Jan 22

After a nice resolution in honor of "School Board Appreciation Week," Council got down to real business.

First, an ordinance was adopted designating the Highland View Redevelopment area as a residential rental inspection district. The whole resolution is here (page 25), but in essence, it permits housing inspections in that district only.

They approved a resolution accepting $1.3 million in payment in lieu of taxes, which Councilman Abbatiello noted was about 1/10th of what it should be. Nonetheless, it was unanimously approved.

Another greenway was approved, continuing the Melton Lake Greenway under the bridge at Bull Run, which will hopefully connect our greenway with those in Knox County at some point. (Knox County? What about the rest of Oak Ridge?) Councilman Beehan brought up a need to eventually connect the West end to the East side, coming through the middle of town.

A resolution was approved to award the contract for shoreline stabilization at Melton Hill Lake. Part of the stabilization will occur on private property (now Flatwater Grill), but the owner will make a payment in lieu of taxes in the amount of the shoreline stabilization cost. A new dock is included.

Planning Commission: Council re-appointed Linda Brown and Marty Cole to the Planning Commission. There will be eight elections up for grabs at the Feb. 19th Council meeting on various boards and committees.

Golden reported on the meetings of the Budget & Finance Committee, which will meet on the first and third Tuesdays at 5:00 p.m., each month leading up to the budget process. The first meeting will be held on Feb. 6, and a calendar for all meetings will be up by the beginning of February.

Abbatiello called attention to the fact that the "corridor study" is coming up, which he promises that the Planning Commission will be apprised of. Secondly, all members got a copy of the tax incentives report "which was incomplete, as it lacks a return on investment on each of these items." O’Connor said that information would be provided. Lastly, Abbatiello asked whether any progress has been made on the AMSE property; David Bradshaw noted (as president of the AMSE Foundation) that information should be forthcoming by the end of the year.


The City Manager addressed the possibility of siting a super-Target anchored shopping center (450,000 sq. ft.). The City would have to provide $10.5 million, to be paid from the redevelopment of the property. Craig Cole of GBT explained that Oak Ridge is "underserved by retail," but the desired locations are all along Illinois Avenue, where there is a shortage of available land.

Pine Ridge is a development challenge, but it’s available. They plan to call it Crestpointe, but acknowledge the significant challenge of developing the site. That’s why they need $10.5M. Much more dialogue and discussion will occur at the work session next Monday evening.

O’Connor says there will be risk for the City, as well as for GBT, but they’ve checked and double-checked the development potential and now desire community input. Really.

Bradshaw notes that it’s an opportunity, but it’s a big investment, and it will require a comfort level and approval from the community before Council will be prepared to approve the project. However, upon questioning from Councilman Beehan, it was agreed to try and hold the meeting in the Council chambers so that it can be televised, and to try to adjust the time so that School Board members may attend prior to our meeting at 7 p.m. (Thank you, Tom!)

Wrapping up was simply a discussion of meeting dates, followed by the appearance of citizens (there were none).

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