By Bill Short
The Millington Board of Mayor and Aldermen has unanimously passed separate ordinances on final reading that adopt the city budget and tax rate for the 2021 fiscal year.
Board members took the actions Monday night during a special called meeting. Both ordinances were unanimously passed on first reading at the board’s June 8 meeting.
The budget ordinance states that the pandemic caused by COVID-19 has led to many changes in the lives and needs of Millington residents and the revenues that fund the city.
It notes that the effect of the coronavirus on more than $2 million of “budgeted but not yet collected” General Fund revenues is still unknown for the 2020 fiscal year.
It states that the FY 2021 budget has been prepared with the assumption that all the programs and services currently provided by the city will continue with adequate revenues.
The budget includes funding for both the city and the municipal school system.
But the ordinance acknowledges that the city intends to “closely monitor” revenues and may elect to draw on adequate reserves, such as the Financial Stabilization Account (the committed balance of the General Fund), if necessary.
It notes that, if revenues are falling “significantly below” projected levels during FY 2021, the city will reduce selected services, programs and/or departments.
Millington Finance Director John Trusty has said the budget presented for the General Fund has a deficit of $1,389,941. So, the city plans to use that amount of the General Fund Balance to finance this budget.
He noted that, in this budget, expenditures and transfers are 3 percent lower, and revenues are only 85 percent of those in the FY 20 budget.
Because of a “decline” in assessments, Trusty said the property tax revenue is projected to be about 96 percent and the sales tax revenue about 82 percent of last year’s collections.
He noted that State-Shared Sales Tax is calculated in a slightly different way, so it does not necessarily trend exactly the same. He is projecting it at about 86.3 percent of FY 20 collections.
On average, Trusty said, the city has historically underspent its budget by approximately $373,000 and collected $591,000 more in revenues.
He noted that, for the past several years, he and City Manager Ed Haley have tended to be very conservative on the revenue side and made sure they had everything possible budgeted on the expenditure side. So, on average, the two combined make up about $964,000 of the projected $1,389,941 deficit.
Trusty said the only services not continued in this budget pertain to USA Stadium, which the city does not anticipate owning.
But he said the budget does include money for raises. The impact on the General Fund, including the fringe benefits, is $153,000.
The budget includes $500,000 for operation of the school system, which meets the requirement for Maintenance of Effort, plus $230,219 to reimburse it for the debt payment to the Shelby County School System.
Also included is an $18,000 grant for the Millington Area Chamber of Commerce and a $20,000 grant for the Millington YMCA. But both entities must comply with the requirements of Tennessee Code Annotated Section 6-54-111 before they can receive those funds.
“We have been building up the fund balance,” Trusty said, “which is why we’ve been having those excess revenues and savings in expenditures over several years. So, we are in a healthy place to be able to do this.”
If the economy returns to “some level of normalcy” by this time next year, Trusty said, the city will only need to use the fund balance like this for one year.
“I had previously told you that we might have a deficit this year,” he said. “At this point, I believe we’re going to be real close to break even this year now, based on the revenues I’ve seen so far.”
The other ordinance continues to levy a tax on real and personal property at the rate of $1.53 for each $100 of assessed valuation. When collected, $1 of that rate will be apportioned for Millington’s “general purposes” and 53 cents for the city’s debt service.
Trusty said that, under the Tax Increment Financing district that Millington has in place, the city receives the tax on the debt service.
“We do not receive the increased taxes in the TIF district for general operation,” he noted. “So, that’s why you have to break it down between debt service and the rest of the tax rate.”