June brings to an end the Town of Farragut’s fiscal year 2018-2019 budgeting process. The Board will vote on the budget in two readings in June (June 14 and June 28) as required by our charter.
While the Town does not provide a full range of municipal services, it does provide street and stormwater construction and maintenance, recreational activities and facilities, planning and zoning, building codes enforcement, engineering and administrative services.
The Town continues to maintain a strong financial position, but we rely primarily on one main revenue stream to fund our government. The Town’s main revenue source is business-generated taxes, which include our local sales tax, wholesale liquor tax, wholesale beer tax, mixed drink tax and cable TV franchise tax.
In FY 2016-17, business activity in the Town included in excess of $570 million in sales and the sale of 533,000 gallons of beer (beer is taxed by the barrel) to produce $7.8 million in business-generated tax revenue. Business-generated tax revenue made up approximately 65 percent of the overall revenue for the Town of Farragut in FY2017.
We anticipate a modest increase in local sales tax revenue this fiscal year, but we are concerned about the negative impact new business just outside our boundaries will have on our wholesale liquor and beer sales. Further, the IMPROVE Act will continue to negatively impact our revenues. Ultimately, we will take an $800,000 loss when the act is fully implemented in 2021.
Also, as the state legislature continues to explore opportunities to reduce taxes on Tennesseans, these initiatives, while positive for residents, may reduce the state-shared revenues our Town receives, further increasing our reliance on business-generated tax revenue.
The long-term stability of the Town of Farragut relies on a strong, stable business environment, so businesses can thrive and prosper. We need to continue to explore opportunities, which attract both national retailers and local small businesses to establish themselves in our Town.
We need to continue to explore avenues that encourage local residents, as well as visitors, to shop and dine in Farragut. While the Shop Farragut program has been effective in highlighting and promoting businesses in the Town, we need to continue to work to expand that reach.
Focusing on steady growth and the long-term stability of the business environment will enable the Town to continue to invest in our parks and community activities, sidewalks and greenways and infrastructure so that we can maintain our property values and remain a relevant, connected, active and attractive place for people to live.