Citizen Outcry Leads Signal Mountain Council To Hold Off On Big Tax Increase

Tuesday, June 25, 2019 - by Gail Perry

In response to appeals from many property owners, Signal Mountain’s budget for 2019-2020 that had been passed on first reading did not get approval from the council on the second and final reading. That budget, which was first voted on June 10, would have increased property taxes by 21.5 percent. This would mean an increase of $208.69 for a $250,000 house, which is close to the median home value in the town.


At a public hearing Monday night before the final vote, citizens who spoke were overwhelmingly opposed to the large increase.

Issues with the budget included large raises for all department heads, concern that the town is not making an effort to reduce spending to match available income and that Walden and mountain residents of Hamilton County outside city limits do not pay their fair share. They have the benefits of living near the town of Signal Mountain without the cost, thus making living in the town less desirable, residents said.


Some of the biggest reasons that the large tax increase is needed is because of the new fire station. It had to be built when Signal Mountain annexed an area that will eventually hold 700 new houses. In doing so, services available to that area must be equal to what is provided in the other parts of town. Now debt service on the fire station building and paying to staff it are the responsibility of the town.


Also, studies of wage comparisons from other municipalities in the area were done which show Signal Mountain has the lowest paid employees across the board. Town Manager Boyd Veal said that has made hiring and retaining employees difficult, and that there has been a “revolving door,”creating a loss of efficiency with the turnovers. There is a new position - a yet to be hired director of the town-owned water company. Compensation for that job was set at $79,000 in order to be competitive. In turn, the salaries for other department heads were adjusted upward to be comparable to that of the new water company director. It was thought that position should not be higher than the other six department heads that have worked for the town a long time and who have done a good job, including the fire and police chief. No one on the council or anyone who spoke was opposed to a five percent pay increase for employees. “I think we’re all on board with supporting employees,” said Vice Mayor Amy Speek, “It’s the how.” There are other ways to cut costs, she said, "at least we need to make an effort."


Revisiting the sale of the water company is advocated by both Ms. Speek and Council member Robert Spalding as one way to increase revenue. It is also a way to prevent a 21.5 percent tax increase, said the vice mayor, because the town could pay off the debt service for the fire station. The new budget and increased property tax were not on the table when the sale of the water system was discussed. There are serious repairs that are needed to the system and those costs have been spread out over three years, said Councilman Spalding. That really represents a 45 percent rate increase, he said. Additionally, it is feared that the cost of repairs will increase over time which has occurred with other capital projects recently and will make actual repairs much higher than the original estimates.  “It’s sugar coated,” he said. He stated, "If it was sold, we would have a partner with deeper pockets that could also make repairs cheaper than we can and sell the water at a cheaper rate due to volume." Mayor Dan Landrum replied, "When someone else owns the water company, you lose control."


Town Attorney Harry Cash told the council that a re-vote could not take place on the issue until there was a motion to rescind the vote for keeping it. However, it could be discussed because of the effect on taxes.


One resident who spoke to the council is a financial planner. He said to create a spending plan and accumulate wealth there is a need to spend less than you make, avoid debt and invest money wisely. He said he believes that a business or government should operate the same way. “You figure out how to live on what you make. That is the way we all have to live," he said, offering his services.  


Vice Mayor Speek suggested other ways to cut expenses from this year’s budget, saying they may be minor but they can add up. As talking points, she suggested raising non-resident fees up $50 each for sports, the pool, the MACC and library and enforce those fees, creating a contract with Walden and Hamilton County, stimulating commercial growth, raising user fees for the gym and pavilion, waiting a year to buy $16,000 mowers, removing a PR fund for the MACC and tuning of the piano at that facility. Signal Mountain residents are taking the responsibility for Walden and the county, she said. One citizen with the same sentiment said that the town should put up a sign saying, “Signal Mountain, just like Walden just more expensive.” He asked why the town is providing services and not being compensated for it.


 Vice Mayor Speek said the council should be mindful that once taxes are raised, it would be permanent and the rate will never go down. Mayor Landrum interjected that fees could be raised just the amount of the tax increase. "I am the only one talking about making cuts and every time I talk, it feels like you try to cut me off," the vice mayor told the mayor.


"I think we have a reasonable budget, and I actually added $268,000 to it in paving," said the mayor. "I think we should cut the paving," said Vice Mayor Speek. That would result in a deficit in 2021, he responded as he pushed to take a vote on the existing budget because he said it could be amended down the road. "It does not make sense to pass a budget if you are going to change it," said Mr. Veal. “I don’t like the optics of it,” he added.


Council member Bill Lusk said that this budget adjusts pay for managers based on a job that is not yet filled and it has caused a salary increase for every department head. He made the recommendation to cap all pay increases to five percent across the board. Removing the new position of Youth Recreation Coordinator was also recommended by Mr. Lusk. The vote was 5-0 in favor of asking the city manager to recalculate the tax rate based on those changes. A first vote on this amended budget will take place at the July 8 meeting.


A continuation budget was also passed, which will allow the town to continue to operate on the 2018-19 budget until a new one is finalized. The 2018-19 budget was amended to accommodate additional or unexpected expenditures that took place during the year.


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