athens tn acfr fy2020

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Economic Condition and Outlook

The economic indicators for the City of Athens and the region were very positive and unemployment
rates were very low until the impact of COVID-19. Unemployment rates increased significantly as many
businesses were forced to close for a period of time. Conditions began to stabilize in May and June and
have shown significant improvement since then including a steady decline in the unemployment rates.
The highest unemployment rate was 17.2% in April and has declined since then to less than 7%.
Compared to the prior year, sales tax was down in March and April by an average of 4% each month, but
has averaged a 6% increase each month beginning in June. COVID-19 continues to create some

uncertainty, but there are positives in the community.

Major industries located within the City include several automotive parts suppliers, manufacturers of
electrical components and plastics, and a producer of dairy products. Denso, the City’s largest employer,
has expanded three times in the past six years. This increases employment by over 400 employees for this
one industry. E&E Manufacturing, Creative Foam and Maxwell Industries have expanded their facilities
and hired additional employees. A new retail development is being planned that will include at least four

new retail establishments and three outparcels.

During the past ten years, the government's expenses related to education have generally increased in
both percentage and amount. This is due to the increased state funding for The Basic Education Program
(BEP), grants, funding for renovations, an increase in sales tax collections and increases designed to meet

the maintenance of effort as required by the state.

During the past ten years, taxes and intergovernmental revenues have increased in both amount and

percentage. Property tax collections have grown because of the growth of Denso, personal property tax
growth throughout the entire city and due to a tax rate increase for the 2015 property taxes. Sales taxes
have also grown, and the City now accounts for approximately 79 percent of sales tax collections within

McMinn County.

Long-Term Financial Planning

Unassigned fund balance in the general fund has continued to grow for seven of the past ten years.
The current year resulted in an increase in the unassigned fund balance. The policy is to maintain an
unassigned fund balance in the general fund that equals 75% of budgeted expenditures. After the fiscal
year is closed, a recommendation is made to the City Council to transfer the excess amount to the capital

improvement fund to accumulate funds for large capital items and grant matching funds.

The City has identified approximately $40,000,000 in capital funding items. The policy for the City
has been to fund many of these types of projects with grant monies or the funds accumulated in the capital
improvement fund. The City continues to do stream mitigation work and storm water projects to improve
water quality in the local creeks and streams. The City and McMinn County, with assistance from the
Athens Parks Foundation, have been making improvements to the Eureka Trail, which is 5.6 miles of
abandoned rail line purchased from CSX and goes from Athens to Englewood.

Relevant Financial Policies

Revenue policies provide for the City to budget revenues conservatively so that the chance of a revenue
shortage during the year is remote. The City will review annually all fees and charges to assure that they
maintain their inflation-adjusted purchasing power. The City will make every effort to avoid becoming too
dependent on one source of revenue in order to minimize serious fluctuation in any year. The City will

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