What make and size rear tire are you running. Our 07 Bulldogs have a 1/16" to 1/8" clearance depending if Metzeler or Avon. Metzeler is a bit wider.
Always replace the rear wheel bearings when replacing the rear tire every 5-7k miles just to make sure...cheap insurance and good preventative maintenance.
The belt can ride off to one side slightly as long as it doesn't ride the pulley side flange hard. Remember the TIRE needs to be tracking in-line straight to minimize tire wear.