Revenue drop hits city hard

The sour economy is beginning to have an impact on Shelbyville's budget, specifically the city's revenue sources.

However, the city treasurer said that the shortfall is only four percent for the first quarter of the fiscal year and that Shelbyville is doing better than most cities.

Each month, treasurer Gary Cantrell submits a report to the city council that points out year-to-date variances in the city's budget, and for the month ending Sept. 30, the city had its largest unappropriated revenue shortfall yet -- a total of $124,239 short out of $2,970,732 revenue budgeted for the first quarter.

But Cantrell says after speaking to the treasurers of other nearby cities in Tennessee, "in the scheme of things, it (the shortfall) is not really that bad" for Shelbyville.

2009 property taxes for October were short by one percent, and Cantrell stated that the tax rolls did not increase quite as much as the city had predicted and that the figure is "not expected to improve."

Also, sales tax collections "are tanking statewide," Cantrell says, and local sales taxes are already short five percent, a total of $41,140 out of the $811,675 revenue the city had expected for the first quarter.

State sales taxes are in the same boat, off by eight percent -- $23,974 out of $284,086 budgeted for the first quarter.

The economy is also impacting taxes on alcohol, with the city's wholesale beer tax down nearly two percent and liquor taxes off by almost eight percent.

Big hit

However, the biggest contributor to the city revenue shortfall is business taxes, which are off 45 percent -- $51,458 out of the $114,579 budgeted.

Cantrell says that the state has taken over the city's delinquent collections and will soon be taking over all business tax collections, adding that Shelbyville had no notice of this move prior to adopting this year's budget.

The treasurer said the city set up their budget expecting to collect the business tax with the bulk of the money going back to the state.

"For our cash flow, the collection of business taxes was pretty important," Cantrell explained, but the state has decided to collect the tax itself and the fees the city used to turn over to the state, will be kept instead.

"At some point, they'll send us back a portion of it, but they've hit us twice -- first, in the revenue we used to get and second, they hurt our cash flow," Cantrell said.

Also, Cantrell explained that the city has no idea how much of the business tax the state collected, or how much Shelbyville would have collected.

The city's cable TV franchise tax is off by about 10 percent, but that is dependant on cable TV revenues, which are also falling.

Spending
controlled

Cantrell said city spending is being kept under control. For the first quarter, the general fund is at $126,608 -- that's how much the city has underspent, meaning that the city is some $2,000 to the good, Cantrell said.

"That's break even," Cantrell said.

The city's 2009-10 budget, passed in June, had a projected deficit of $51,659, with estimated revenue of $12,041,519 and expenses of $12,093,178.

Of course, Shelbyville isn't the only government body showing drops in revenue.

On Tuesday, State Finance & Administration Commissioner Dave Goetz announced that Tennessee revenue collections for October were 1.53 percent below collections from this time last year -- $698.2 million.

Collections in October reflect consumer spending for September and for the third consecutive month in the fiscal year that began July 1, state tax collections fell below budgeted estimates.

Goetz said that October is the 17th consecutive month in which sales tax collections have experienced negative growth.

"We are extremely concerned with the year-to-date negative growth in our tax collections, but we are committed to keeping the state's budget in balance in a responsible manner during this extraordinary national economic downturn," Goetz said.

Year-to date collections for three months were $101.3 million less than the budgeted estimate. The general fund was under collected by $88.2 million and the four other funds were under collected by $13.1 million, Goetz reported.

But as for the city, Cantrell said that Shelbyville will continue to keeping "running things like a business."

"That's what businesses do," he said. "You don't spend money you don't have."