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BUDGET 2008-2009
2008-2009 Proposed Annual Operating Budget [PDF]
Budget Info for 2008
Transcript of Mayor Bill Haslam's speech on the proposed budget

City of Knoxville's fiscal year 2008-2009

May 1, 2008
SYSCO® Knoxville

Good afternoon, thank you for joining us on this, another beautiful day in Knoxville. Seed, I really appreciate how you capture a moment with creativity and spirit and a reminder of the power of language.

And a big thank-you to Mark Brown for your generous introduction and for doing such a great job as our Vice Mayor.

Thanks to Crissy, who patiently sits through most of my speeches.

I want to again thank Tommy Dail and Sysco where just a month ago we were very pleased to attend the ribbon cutting for this magnificent facility. This great company chose Knoxville – in fact the heart of Knoxville – for its site for its major, state of the art food distribution center. You are just the kind of company we love to bring to the area – environmentally friendly, energy efficient, providing good, high paying jobs. Your locating in the heart of Knoxville is a special plus.

I have said many times that great things happen when Knoxville and Knox County work together along with the Knoxville Chamber in our recruitment of new jobs. I want to pause and thank Mayor Ragsdale for his support and cooperation as we recruited Sysco to Knoxville.

This is the fifth budget speech I have given. I am reminded of the interview with the man who was about to be Zsa Zsa Cabor’s 7th husband. He was asked how he felt as he looked forward to his wedding night. His response was to the effect of ---Well, I am a bit nervous. I know what to do but I don’t know if I can make it very interesting.

That’s how I feel about this speech. I know what to say, I just don’t know if I can make it interesting.

Four priorities revisited

As I began my first term I outlined four major points of focus. First, Stronger, safer neighborhoods, Second, City services you can count on at a competitive price, Third, An energized downtown; everybody’s neighborhood and Fourth, More and better jobs. Our priorities haven’t changed. We have just learned how to be more effective.

We have made great progress on all of these and these will stay at the heart of our focus. Take the first two. In my first year we instituted 311. It’s been doing a lot more than providing folks a great way to get a concern or complaint or suggestion to the right person in the right department. It is generating a wealth of data to help us manage better.

Two years ago we started the problem properties task force where we bring city departments together to focus on a small number of properties that rob neighborhoods of their value.

Last year we announced that we were creating a new Office of neighborhoods to help folks organize and communicate with those of us in government. But the key to the first two priorities, even more than new programs, is getting the right people to execute the programs. I’ll have more to say later about the people who work for the city.

The third priority, Downtown is continuing to serve as the center of so much of what we are as a community. More and more people are making downtown a top choice for entertainment, working, and living. From the Bijou to the Tennessee to the great to the new cinema, to Market Square, with Sundown in the Spring, the Farmers Market in the Summer and Fall, to ice skating in the Winter ---- downtown is exciting, fun, and truly the heart of our city.

My fourth priority is more and better jobs. In many ways this is the most important because it is absolutely necessary. Without economic opportunity our best and our brightest leave and those who stay find it harder and harder to make ends meet. We will continue to invest in the infrastructure to compete for businesses like Sysco, and to keep and grow businesses like Scripps – who announced that, not only would they keep their headquarters here, but they were going to expand and increase the number of employees.

As we stand here I am reminded of problem-solving at its best. This was once a site whose mere mention brought about a narrative of insurmountable problems – blight, environmental challenges, litigation. Now as we look around we think of solutions – jobs, opportunity, and revitalization. Having a great company like Sysco come to town is the product of a lot of hard work among the State of Tennessee, the Chamber partnership, Knox County and the City of Knoxville.

I am especially pleased to be holding this year’s lunch here in the heart of the Fifth District represented by Bob Becker.

Where we are financially

We are here today to discuss the 2008-2009 budget for the City of Knoxville. I will start with what may well be one of the worst kept secrets in recent years.

Thanks to conservative, responsible budgeting, the hard work of our city employees, and some real growth in our city economy, this budget does not require a tax increase.

I want to repeat some good news you may have heard. Just a few weeks ago Standard and Poor increased our bond rating to AA+. This is the highest rating in the City’s history. It saves taxpayer dollars in interest costs. It is a great testimony to the management of city dollars, Council’s responsible approach to spending, and the hard work of our employees. Our reserve fund, the city’ saving account, has increased from 18 to 42 million dollars. Our total outstanding debt is now 20% lower than it was when we came into office.

We still face the fact that if we just keep on with business as usual our costs increase faster than our revenues. I can assure you that we have not been content with business as usual to this point and we won’t be in my second term.

One way of looking at a budget is a balance between continuity and change. An awful lot of our dollars are pretty well committed from year to year. We pick up the leaves, patrol the streets, and put out fires. The view from 30,000 feet may look about the same.

But at the surface we are constantly finding ways to get services to you more effectively and more efficiently while constantly looking for savings. Because it’s impossible to get into too much detail in this speech, I thought it would be helpful to give you an overview by highlighting four key themes in this year’s budget.

Theme – 1 A conservative budget

The first theme is: This is a conservative budget. I don’t think it would be a surprise to anyone when I say that our economy is slowing. Locally, our economy is not slowing as much as the national economy but, it is slowing nonetheless. We can look at the objective data that we have, like the number of applications for building permits, or we can take it anecdotally and talk to real estate agents and business owners around town. Regardless, I think all of us would agree that this is a time to be particularly cautious in how we spend the city’s money. Just like in how you spend your own money; there are always a lot of things that we would like to do that we can’t do as a city – just like at your house. However, when things get a little tight in the economy, I think it is all the more reason for us to be even more careful with how we spend money and we are going to do that in this year’s budget.

Theme – 2 Core of the City

Downtown is the heart of our city. One of the reasons we have stressed downtown’s being strong so much is that we can take the momentum of downtown and move outward from this strong heart.

We are going to invest in Cumberland Avenue as it takes its next step forward. We are already working on creative ways to strengthen the Magnolia Avenue corridor, and Downtown North, which is already showing some great new signs of life. We will continue to invest in the South Waterfront, which everyone knows has been one of our biggest projects. We believe its future is as bright as ever.

I believe we are on the cutting edge of a new paradigm for development. The old approach was to go to the next greenfield on the edge of town.

Driven by the high cost of energy, lack of available land, and peoples’ desire for more community, development can and should happen back toward the core of the city. This approach benefits all of us. It places fewer burdens on our roads and streets. It brings investment to long-neglected properties which can then pay their fair share of taxes and reduce the burden on others. It does not create any demands on our storm water or utility system, and it brings growth to areas where we have capacity in our schools.

Knoxville is one of just twelve cities chosen to receive a Solar Cities grant for 2008. We will use these grant funds to install solar panels at our transit center as well as on our net-zero energy consumption home to be built on the South Waterfront.

Earlier in the Spring we, along with one of our housing partners – Knox Housing Partnership – broke ground on the first of seven LEED certified homes on Chestnut Street, making sure that people can afford to live in affordable housing.

I am making our becoming a greener city a top priority for the remainder of my term. I know many of you get the shivers when you hear me say that. Some of you are probably thinking – “Of course, and why did it take so long?” Others may be thinking – “Oh no, do we have to go down this road?”

My feeling is that no matter what our thoughts might be on global warming it is undeniable that we all benefit by using less energy.

In the short term it costs more to implement some changes such as the one we are making to LED lights. Our one-time investment of $750,000 just last year will be paid back in two years. I don’t know what kind of return you are getting , but I’m not getting 50% on my investments.

I am also very excited about the work of the energy and sustainability task force. They have a lot on their plate and they are already having an impact. Through their efforts we are preparing to undertake a major examination of the city’s use of energy and ways we can use less, and, of course, save in the process.

Theme – 3 Infrastructure

My next theme is about infrastructure. People say, I hear about infrastructure investments, what does that mean? Well, it is all that non-sexy stuff that costs a lot of money. It is keeping bridges in repair and keeping roads paved, and continuing to work on long-term drainage issues.

Every year when it comes time to look at the capital request for budget (those things that aren’t part of the on-going, every year operating costs of the business) everyone always comes in with wonderful projects. Why don’t we add this, why don’t we add that? You have no idea how tempting it is to do that because that is what puts a lot of fun into government.

Whether it is repairing sidewalks or building new sidewalks - $750,000 in this budget – paving roads to keep us on schedule so that potholes don’t expand - 4.4 million – or the 1.5 million we are using to repair bridges, or attacking long-standing drainage issues – 2.5 million - there are always a lot of things that we HAVE to do. That’s infrastructure. It’s what you have to do even if it is not what your really want to do.

Theme – 4 City employees

My fourth theme is the compensation of city employees. Every year at budget time our biggest argument is about the size of raises our employees should receive. Last year I made a commitment to council and to our employees that I would get a set of fresh eyes to conduct a fair study of our compensation and do whatever we could responsibly do to make sure that our pay and benefits are competitive.

Under the leadership of Deputy to the Mayor Larry Martin we formed a group that included Councilman Bob Becker, city directors, and representatives of general government, fire, and police employees as well as with Civil Service. This group worked together in a spirit of trust and cooperation to choose the company to conduct the study - Mercer was the overwhelming first choice - discussed how to choose comparable cities, and agreed on the methods to use. Throughout the process members of the advisory group met with city employees to keep them informed.

The results showed that we are behind our peers in salary and a bit above in benefits. Our total compensation is about 11% behind where we expect our peer cities and organizations will be on July, 2008.

Our consultants also recommended major changes in the way we structure positions, again to insure fairness and to reduce compression of salaries over time in the uniformed bodies, where new hires make almost as much as people with valuable experience.

So here is what we propose to do. I will recommend salary adjustments over this and the following two years such that our employees’ total compensation reaches 100% of that of our peer cities by July, 2010. This year I’m going to ask City Council to add another $1,100,000 to the 1.8 million dollars necessary to fund a 2.5% increase.

Those employees whose pay and benefits are well below that of their peers will thus receive significant increases over the next three budget cycles. Those whose pay is equal to, or above that of their peers will, of course, receive their 2.5% increases each year.

Our implementation plan places over 9.3 million additional dollars into city employee compensation over the next three years. This is 3.8 million dollars greater than the amount generated by annual 2.5% annual increases.

In order to address the issue of wage compression we are also moving toward a full implantation of a step plan for the uniformed bodies and adjusting the open ranges for general government.

I have provided council with a document summarizing the process and proving examples and explanation of the phasing of salary adjustments over the next three years as we reach market. I am making that information available to employee leaders and placing it on the City Intranet and Internet.

This plan will bring about a fundamental change in the compensation structure for City of Knoxville employees. This plan brings predictability to compensation over the next three budget cycles. We will know what to budget and employees will know what to expect and it puts in place our policy that the appropriate compensation level is that of peer cities and organizations. I want to make clear that there will not be across the board raises, but targeted increases based on market levels for each position.

Here too, I expect that people might hold one of two opinions. Some may think – “This sounds like the right thing to do” while others may be thinking – “Why are you doing this with my tax dollars. I am not getting a raise and I may be lucky to have a job at all with the way things are going.”

Here is what I think. Our pay plan should be fair and equitable for our employees and should be a good investment for the taxpayers. We will be able to attract people with the skills we need, and even more importantly, to retain people who have developed new skills while gaining the experience that can make the difference between life and death in some cases or thousands of dollars wasted or saved in others.

Stewardship – Insuring Return on Investment

This investment in our employees is, then, an investment in our human infrastructure, much as spending on roads, parks, or sidewalks is an investment in our physical infrastructure.

Of course we have to make these investments responsibly, as resources permit, and always remembering that we are stewards of tax dollars.

Our job is to make sure we don’t burden future citizens with obligations without the assurance that we are also creating a good climate for economic growth and the ability to keep our tax rate low. I have put our budget together with this in mind.

People often ask me - “What have you learned about government since you took this job?”

Well, the answer is, I have learned a lot. But the key thing is this. It’s our job as city leaders, council and administration, to be stewards of other people’s money and other resources. I think the word steward is a high calling.

Being a steward means that you realize that while it is not your money, you are responsible for what happens with it. Being a steward means that at the end of the day, there is an expectation that the money you have been entrusted with has produced great value and great results for the people that you serve. That is our commitment to you.

Concluding Remarks – The importance of community

Sometimes in this job, as in others, it is easy to forget that the whole is greater than the sum of its parts or to lose sight of the forest for the trees. Sometimes a single day’s events can help crystallize thoughts years in the making.

Last Saturday I spent a couple of hours going over numbers with Finance Director Jim York as we put together final pieces of the document I am giving you today. Hovering over printouts is as abstract as it gets, with programs that affect peoples’ lives being reduced to some digits in a spreadsheet.

Abstract or not, getting it right is critical. Failing to invest can be just about as problematic for our city’s future as committing more dollars than we can afford. Putting it all together after month of hearings, reviews, and estimates is very heartening.

When we were done I headed down to Market Square to help celebrate five years of the Farmers Market that started with the revitalized Market Square. People were everywhere, having a great time, buying things from local merchants. Sure the city helped a bit with the Farmers Market, but most of the energy came from those who put their hearts and souls into making this event a success. I could see that downtown has become a great place, welcoming, fun place where people of all ages from all over our city and beyond want to be.

Then I went to a great neighborhood – Lonsdale – and got to participate in the neighborhood cleanup and celebration initiated by a neighborhood group, centered around the new park that the city built this year. It was heartening to see how neighborhoods can come together – white, black, and Hispanic – to work and to have fun, share a meal, and to feel a part of something a bit bigger than themselves.

Whether its downtown, or Lonsdale, or any dozens of neighborhoods I could mention, its called community, a concept often used, tough to define, but easy to recognize and even easier to appreciate as fundamental to our being a great city.

All of these brought a thought, or maybe more of a feeling, to mind. Much of what starts out as numbers in a budget worksheet comes to life to make a difference in people’s lives. At best what we do as the city sets the stage for the creativity and enthusiasm and entrepreneurship of others. Last Saturday began working on numbers, then feeling the energy downtown, then taking part in a wonderful neighborhood celebration brought that together for me.

That is why I love being mayor, to be entrusted by you to lead such a great city and to be in a position to see ideas become reality.

Thank you for coming today. And thank you for working with us as we become a great city.
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