Lewisburg's treasurer reports a 5 percent drop in revenues that can be attributed to the recession and therefore the City Council approved a budget adjustment Tuesday night.
Fortunately, other changes during the fiscal year coming to an end on June 30 counterbalanced the $653,000 drop in revenues and ironically, the budget now totals about 1.75 percent more than what it was when adopted last summer.
Final budget amendments for municipalities are not unusual at this time of year, but they do indicate financial conditions for retail businesses and real estate and some major businesses. One big business concern at City Treasurer Connie Edde's office was the pending bankruptcy of General Motors.
She explained that and better-known revenue sources this week after the city Council's regular monthly meeting when City Manager Eddie Fuller noted the reduction in sales and property tax revenues.
Local sales tax revenue has dropped by $225,000 from what was budgeted last summer for the soon-to-end city budget, Fuller told the Council Monday night. There's also been a $140,000 drop in projected state sales tax collections here that are shared with the city.
"It's in-line with what the state is facing," Fuller said.
State Finance & Administration Commissioner Dave Goetz on Monday reported state tax collections declined in May - the tenth consecutive month of lower revenue for Tennessee. (A complete state report is in this edition of the Marshall County Tribune.)
Sales tax collections would not have been as bad, Edde said, because one retailer in the city had been overpaying those collections from customers for eight months.
"So," she said, "they filed for an adjustment... The money was refunded to them in April. The effect of the decrease was in May."
Karen Blackburn of the state Department of Revenue advised Edde of the overpayment that required a refund, Edde said. Blackburn could not identify the retailer located in Lewisburg.
Lewisburg's treasurer on Tuesday night pointed to a list of revenues for the city and it includes a $150,000 decrease in property tax revenue collections.
Newly elected Councilman Ronald McRady, a former financial officer in two state departments, reviewed the information and confirmed that collection efforts were continuing for property taxes.
Edde reported during the monthly meeting that collection efforts would continue and later she explained one that was revealed on Tuesday to have been resolved.
General Motors pays personal property taxes on equipment it provides to its suppliers, she said. Because the equipment, such as molds, or dies used by Walker Die Casting here, is GM property, the automaker pays taxes on that personal property.
City Attorney Bill Haywood was to have been notified that Lewisburg should be added to the list of creditors in GM's bankruptcy petition to the federal court for protection from creditors, said Edde, who had a copy of the bankruptcy petition on her desk Tuesday night.
However, Wednesday morning, she reported that a member of her staff had researched the debt and found that "GM taxes are all paid," Edde said.
"They were paid before GM filed" for protection from creditors under the bankruptcy laws, the city treasurer said. The bill was $8,453 for the fiscal year 2008-09 for 2008 taxes.
"We're just blessed," Edde said.
Meanwhile, another effect of the recession on city revenue is from lower interest rates.
"Last year we were earning 2-3 percent," Edde said of money held in reserves that couldn't be tied up in certificates of deposit for long periods of time. "Now, we're getting 1 percent."
The resulting decline in interest income for the city was $120,000.