“We continue to operate above the norm and we continue to operate above what our goals are in the office,” Smith said.
He said the return on investments in 2005-06 was 80.2 percent of the federal funds rate. In the ensuing years the return on investments increased to 101.3 percent, 117 percent in 2007-08, 334 percent in 2008-09 and in 2009-10, the return on investments was 1,144 percent of the federal funds rate.
The federal funds rate is the interest rate banks charge other banks overnight. The Federal Open Market Committee announced Aug. 10 that it will maintain the federal funds rate at 0 to .25 percent and anticipates economic conditions are likely to warrant exceptionally low levels of the federal funds rate to continue for an extended period.
“Where we would really like to be is in the 101.3 percent to 117 percent range,” Smith said.
If that goal is met the federal funds rate would have to be adjusted upward. In 2007, the fund ranged from 4.25 to 4.75 percent.
“We’re hopeful the rates will increase but I don’t expect that to happen before we see a decrease in the unemployment rate,” he said.
Smith said property tax collections remained steady in fiscal year 2009 by collecting $35.724 million or 89.6 percent of taxes due. In fiscal year 2008, Bradley County residents paid $34.821 million or 89.5 percent of property taxes.
“Everyone kind of expected to see a dip. We didn’t see it last year and didn’t see it this year,” he said. “So our property tax collections have remained consistent.”
Sales tax collections increased in fiscal year 2010 in the city of Cleveland and Bradley County to $22.669 million and $3.422 million, respectively, but decreased by $12,515 in Charleston to $203,015 collected in the fiscal year 2010 that ended June 30. The sales tax collections include the .5 percent increase approved by voters. The half-cent accounted for $545,601 collected in the county and $3.521 million in Cleveland and $32,067 in Charleston.
Sales tax distributions increased $91,903 over fiscal year 2009 distributions to $3.762 million in Bradley County in fiscal year 2010; Bradley County Schools increased $939,631 to $8.831 million; Cleveland City Schools increased $463,004 to $4.167 million; city of Cleveland, increased from $7.819 million in fiscal year 2009 to $8.763 million in fiscal year 2010; and the city of Charleston decreased from $105,487 to $99,362.
The portion of the sales tax increase disputed by the city of Cleveland and Bradley County amounts to $372,956. The money is being held in a separate account.
Smith said the $15.647 million hospital reserve balance is currently invested in a 24-month certificate of deposit with First Tennessee.
Smith hopes there will be more flexible payment terms beginning in March 2011, when his office is expected to offer a 12-month payment plan. He said it could be March 2012. The existing quarterly payment plan will continue to be available.
“We’ll have the ability to do bank drafts and you’ll also be able to come straight into the office,” he said.