JELLICO, Tenn. (WVLT) -- Jellico City Commissioners voted down a proposed tax increase Monday night. They also passed an unbalanced budget.
Mayor Ray Stiers said the budget passed unanimously and he's not sure where the money will come from to balance it.
He said he and other officials will meet with the state comptroller's office Tuesday to receive new directives to fix their budget crisis.
It's no secret the city of Jellico is struggling financially, but recently, things got even worse. The state comptroller's office sent a letter to the city warning it to adopt a budget and tax levy by Monday.
"This letter from the Comptroller is telling us to get our house in order. And if we don't, the state will come in and will tell us what we're going to do," said Mayor Les Stiers.
Faced with $160,000 shortfall, the city is proposing a 50-cent property tax hike on every $100 of assessed value. So for a house worth $100,000, that's a jump of $500.
"So many people in our area live on a fixed income - they don't have an extra amount of money to pay for property taxes. And even those people who do work, such as myself - have other expenses. Everything is going up, I realize that - but that's just a huge leap all at one time," said Debra Sharp, who lives in Jellico.
"I didn't vote for the tax increase. I didn't vote for the budget - I think there needs to be a little more study on it," said Alvin Evans, a city councilman.
But the mayor said without the hike, there would be cuts to fire, police, parks and the library.
The proposed budget also calls for city employees to pay half of their monthly healthcare insurance premiums. Right now, the city pays 100 percent.
Another controversial part: court costs. Currently, only some citations like DUIs have court costs associated with them. If the budget passes, expect to pay court costs, which can be hundreds of dollars, on all tickets and citations.
"I'm sure if they've got a ticket, they've done something wrong, and of course everybody should pay the consequences, but things need to be a little bit more fair instead of outrageous," said Dawn Wolfe, who lives in Jellico.
But one way or another, Jellico has to make ends meet or it will have to answer to the state.
Jellico will hold a public hearing on the budget at 11 o'clock on Monday. Council members are expected to vote on the budget at noon. They're scheduled to meet with the state comptroller's office on Tuesday.
This isn't the first time Jellico has had money problems. In October, city workers didn't get one of their paychecks because the city didn't have enough money in its account. The city also had no liability insurance from December 2012 until this May.