City Taxes, Fines, and User Fees...It’s All the Same, Right?

I know many people I’ve talked to have a hard time understanding how city finances work. I understand - it’s a little abnormal from business finances. In a business, revenue or sales go into one big bucket used to pay for the product or business. However, in local government, there are multiple buckets

Each bucket has its own revenue and set of services it provides. Imagine four buckets in front of you; one has ‘General Fund’ written on it, another says ‘Water/Sewer Services’, another says ‘Electric Services’, and another says ‘Sanitation Services.’

Each of these buckets represents a different type of fund. The general fund bucket collects money from property taxes and sales taxes. This bucket’s job is to help support the operations of the city government.

The general fund bucket provides services like the public library, new and repaving streets and sidewalks, parks and recreation, police services, city financial management, property maintenance enforcement, fire services, city administration, and development services.

The general fund bucket also appropriates money to organizations that provide a benefit to the community, such as the Senior Citizens Center, Carter County Rescue Squad, and the Elizabethton-Carter County Animal Shelter.

Fines are issued often because of violating a city ordinance. The costs of enforcing these ordinances comes from the general fund bucket therefore fines are also collected in the general fund bucket.

The remaining buckets are what are called Enterprise Services. These services are operated similar to a business and cannot use the money in the general fund bucket to operate. Just as their name suggests, these buckets provide specific services such as water and sewer service, electric service, and garbage and solid waste collection (sanitation services). Water/sewer services, electric services, and sanitation services (or garbage collection) can only spend the user fees that their customers pay for the service - just like a business.

The user fees you pay for these services are based on the amount or type of service provided. The rate of these user fees are set based on how much it costs to provide these services, and cannot be used to pay for other services in other buckets.

I hope this has helped clear the muddy water! Next time you hear a friend or neighbor talk about their bills or taxes, take a minute to help explain how this process works to them. Let’s talk about it!