The Greeneville Budget and Finance Committee on Friday held its final meeting before making a recommendation on balancing the town's estimated $21 million budget for the 2010-11 fiscal year.

The committee will have a work session with the Greeneville Board of Mayor and Aldermen on Tuesday, Sept. 7, followed by consideration of the proposed budget in a called board meeting on Thursday, Sept. 9, according to a schedule presented by Mayor W.T. Daniels.

Second and final reading of the budget could be scheduled for the board's regular meeting on Tuesday, Sept. 21, Daniels said.

The Sept. 7 work session is expected to include the committee's recommendation for covering a $1 million budget shortfall, along with discussion of whether to change the town's financial adviser and how to proceed with the town's long-term debt.

On Aug. 26, the committee heard a presentation from Stephens Inc. Investment Bankers, of Nashville, which recommended the town refinance its variable-rate debt and lock it in at a low fixed rate.

At that time, the committee discussed making a recommendation to change financial advisers from Morgan Keegan Company Inc. to Stephens Inc.

The Stephens Inc. presentation for refinancing the debt from variable rate to fixed rate would eliminate a risk of paying higher interest rates in the future, according to Sam Miller, president of Consumer Credit Union, who had met with committee Chairman Darrell Bryan and Stephens Inc. representatives.

The new debt schedule presented by Stephens Inc. would finish paying off its debt in the year 2028, compared with the current projected payoff year of 2025.

The new schedule also includes smaller debt payments in the first four years, with the first year's debt payment decreasing from $2.2 million to $1.2 million.

At the Friday morning meeting, Rick Dulaney, of Morgan Keegan, said the town should continue to monitor its debt, but warned that refinancing the variable debt would result in a loss of approximately $2 million.

This loss would result from extending the debt payoff by three years, Dulaney said.

He added that an estimated termination fee of $1.3 to $1.5 million must be financed on a taxable basis.

Chairman Bryan, a former Greeneville mayor, said he has no confidence in Morgan Keegan because of what he said was the high amount the town has paid the firm for its services and the low amount of principal that has been paid on the town's debt for the past 10 years.

Bryan estimated that the town has paid just $2 million in principal on $26 million it borrowed 10 years ago.

"To me, it looks like you've cost the town a lot of money," Bryan told Dulaney. "It appears to me that we've not been served very well."

Dulaney said, "I beg to disagree with that," noting that Morgan Keegan has provided a number of options when the town has considered borrowing funds or refinancing debt.

"We have been in talks with the town all through this process," Dulaney said.

Bryan said the town should have a financial adviser that does not serve the town in multiple conflicting roles, such as: administrator, trustee, underwriter, remarketing agent, swap adviser, swap provider, registration and paying agent, or other similar roles.

Bryan asked longtime Alderman Sarah Webster if she had any questions.

Webster said she thinks refinancing the debt and balancing the budget are two separate issues.

After nearly two hours of discussion on the town's long-term debt, the committee began reviewing line items in the latest proposed 2010-11 budget.

For the latest proposal, the committee had asked Town Recorder Jim Warner to prepare numbers based on the Aug. 26 recommendation by Stephens Inc. to refinance the variable-rate debt.

Chairman Bryan said that, if the debt is not refinanced, the budget committee must consider the following options:

* making drastic cuts in services;

* using reserve funds;

* increasing property taxes; or

* some combination of all three.

Prior to Aug. 26, the committee was considering balancing the budget by using $369, 214 in general-fund reserves and $617,409 in street-aid reserves.

This scenario would leave $4.3 million in the general-fund reserve, which the committee said was the minimum needed to safely operate the town without borrowing to cover ongoing costs.

The latest proposal shows the budget balanced at $20,096,614, with just $50,000 to be taken from the general-fund reserve.

Warner said that this number will change when the refinancing is removed from the next budget proposal.

The latest proposal includes step increases, with adjustments to remove extra pay for CDL licenses for six maintenance employees in the Parks and Recreation Department.

The licenses were obtained by the employees after they were transferred to the Public Works Department two years ago.

The committee also reviewed additional cuts in expenses that Warner said were made after recent meetings with department heads.

Chairman Bryan expressed concern about the line item for contracts in building inspection, which was reduced from $25,000 to $10,000.

Bryan said this line item is used to pay for cleanup of unsightly properties.

He said Building Official Jim Snyder told him $10,000 would be enough to clean up two residential properties.

Mayor Daniels said the amount allocated for this line item determines how aggressive the town is in cleaning up properties.

Warner noted the actual expenses in this line item for the past three years were $9,390 in 2009-10, $2,758 in 2008-09 and $2,090 in 2007-08.

In capital improvements, Butch Patterson, director of the Parks and Recreation Department, expressed a need by his department for a new mower at an estimated cost of $7,000.

The mower was not included in a list of budgeted capital requests presented by Warner.

The list of Parks and Recreation capital requests included:

* $1,500 for the George Clem Pavilion roof;

* $2,500 for portable pitching mounds; and

* $2,500 for roof replacement at the maintenance building.

Warner noted that removing those items would be nearly enough to pay for the mower.

Patterson said he would like to trade in an older mower and keep the maintenance-building roof in the budget, if possible.

Bryan asked Patterson to work with Warner to make that happen.

The board also reviewed proposed allocations to volunteer organizations.

The Volunteer Center of Greeneville and Greene County and the Middle Nolichucky Watershed Alliance would be funded at the level of their requests -- $1,000 and $1,500, respectively, according to the proposal.

The Dickson-Williams Mansion requested $15,000 and would be funded at $7,500, according to the proposal.

The Greeneville Emergency & Rescue Squad requested $10,000 and would be funded at $3,500, according to the proposal.

The proposed Dickson-Williams Mansion and Rescue Squad allocations are at the level of last year's funding.