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Maryville City Manager Greg McClain expects it will take 1 year to 18 months before things improve financially.

McClain gave his annual state of the city briefing at Blount County Chamber of Commerce Tuesday morning. As requested by Chamber organizers, he focused on the current economic situation.

McClain said it was in mid 2006 when things began to go sour. "We began to see housing topple over," he said.

In summer and fall of 2007 the country experienced a "deterioration in the subprime mortgage market, weakness in the housing market, Wall Street banks weakened and rising oil prices."

"We saw things we've never seen in our lifetime," he said. "They're still very serious. We're not out of this mess yet. We'd wake up every morning and think what's next. Consumer confidence locked up. Everybody sat still paralyzed."

In the first half of 2008, collateralized debit obligations began to default, resulting in further tightening of the credit markets; rating agencies began to downgrade AAA rated bond insurers and Wall Street investment bank Bear Sterns collapsed and was taken over by JP Morgan.

Things worsened in the last half or 2008 and on Dec. 1 the National Bureau of Economic Research announced the recession began in December 2007, ending an economic expansion that began in November 2001.

In 2009, the federal stimulus program was passed. "The stimulus money poured into our psyche. We're still working to get that money started. That lagged and it really hurt us," he said.

He said both the Republican and current Democratic administrations had their successes and failures "because we're in uncharted territory."

Unemployment in Maryville climbed to 5.3 percent in February 2008, 8 percent in January 2009 and preliminary figures for February were 8.4 percent, for a year to date increase of 3.1 percent.

Bankruptcies began to climb.

Revenues decline

Maryville saw declines in almost every revenue source -- sales tax, excise, gasoline, franchise and motor vehicle registration. Increasing were tobacco and beer taxes, he added.

The city bonded debt capacity, which can be a maximum of 15 percent of city assessed value of $746.1 million, is at $111.9 million.

McClain said the city can borrow enough to do an intermediate school and a few more projects. However, the current bond market looks good for 15-year loans but not for 30-year, which the city needs of finance a new school.

Maryville revenues have been slowing for 2 to 2¬½ years. McClain said as of June 30, sales tax loss from last year was $380,000. Property taxes are holding their own right now.

There have been a number of foreclosures and a resetting of market values. "I don't think we'll see a decline in property values, but I don't think we will see the growth we're used to," he said.

Thanks to the drought and conservation, city water sales decreased 3.13 percent in fiscal 2008-09. Use of electricity declined 15 percent in that same period for the industrial/larger users and residential sales declined 3.7 percent as the economy worsened.

Where to now?

He explained where the city plans to go from here.

The current budget is down 6.1 percent from last year and appropriations were decreased 7.6 percent.

The philosophy of the city is not to touch city services for the citizens and not to lay anybody off.

"Employees said, very generously, if they had to sacrifice, they would do it," he said. To do that, for the first time in 20 years, employees got neither step or cost of living raises and six vacant positions have not be filled. He thanked employees for taking cuts in benefits.

"The pain was distributed to everybody. We all cut down," McClain said.

To hone down this year's budget, McClain said staffers went through phone bills and contracts, and all people the city does business with were asked for better rates, with almost all cutting costs.

He also thanked Parks and Recreation for voluntarily cutting back its request from the city by 2 percent. "They took it on the chin and cut back on their own," McClain said.

Some projects the city funded included matching grant money. For example, the city budgeted $350,000 as its portion to keep from losing the $2.1 million Army Corps of Engineers grant to dredge the Greenbelt Lake.

The city will also be putting in $10,000 as its share on Sevierville Road improvements.

McClain said the city has 350 employees and in benchmark comparisons against similar area communities, the city has fewer people and costs are less that in those cities.

He stressed the large number of partnerships, 21, between Maryville and other local agencies. This ranges from sharing costs of library, Parks and Recreation, industrial parks, wastewater and the landfill. The governments also share GIS System, police, electric and water equipment.

Maryville, Alcoa and Maryville College are building the Clayton Center of the Arts.

During the drought last year, Alcoa and Maryville worked together to build a secondary water source on Little River.

Currently Maryville, Alcoa, Blount County, Maryville College and Blount Memorial Hospital send a list of their needs to representatives in Washington, D.C.

$300 million quandary

McClain said the total amount of need from schools, library, parks and recreation, all other agencies, fire, police and public works is $300 million in 16 years. The city doesn't have those funds.

The funding requests from the various groups go to Maryville City Council for a final decision, he said.

Maryville Councilman Tommy Hunt said that the schools, as much as the mountains, are a big draw to Maryville.

He also said schools will be what will draw businesses and people to the industrial parks, like the research and development Pellissippi Place.

The quandary for council, schools and other departments will be coming up with the money needed to fund projects.