The Kelly Administration talked tax increase with the City Council on Tuesday, saying the city was not even keeping up with inflation by continuing to hold the line on the tax rate.
Kevin Roig, the mayor's chief of staff, said at a budget education workshop that Tennessee is the third lowest tax state. He said, "We're in a very favorable tax climate."
Hanneke van Deursen, city director of Housing Finance, said, "Unless we come back and raise taxes, we are creating a really big gap in the city's resources. And that gap is only going to continue to get bigger over the next four years."
Mr. Roig said an increase bringing in $17.5 million was needed to go along with $5 million already set aside "to true up" pay for city police and firefighters.
Ms. van Deursen said if the council left the rate at the 1.55 per $100 of assessed valuation of the Certified Tax Rate there would be just $4,745,156 in "new money" from growth available to the city. (The Certified Tax Rate is a rate adjustment that ensures the amount of total taxes collected for a county remain the same after a reappraisal. Local governments remain free to adjust that rate to any amount they choose.)
On the other hand, if the city stayed with the prior rate of 2.25, it would have over $80 million of available income for the fire and police pay, infrastructure and other projects, officials said.
The council was told that city taxpayers now pay an average of $2,038 in city and county property taxes per year. Going to the 2.25 level would bring an added average $653 bill for city taxes.
Councilman Dennis Clark said, "As we discuss raising taxes I am very concerned on who does the burden fall on."
Ms. van Deursen said the question was "how will the city capture the historic growth that has happened the past four years."
She said property values here have gone up from $24.5 billion to $38.5 billion - a $14 billion increase.
"That's an historic increase in values. This is an incredible success as property values here have gone up almost twice the rate of inflation," she said.
Property values rose in all nine City Council districts, it was stated.
The council was told that 45 percent of property here is owner occupied, with 55 percent non-owner occupied.
Ms. van Deursen said renters also would feel the effect of a tax increase through pass ons from landlords.
Chair Jenny Hill said of the big values jump here that "it's not as if Chattanooga has a special sauce. House values have skyrocketed everywhere."
The county earlier passed a budget leaving in place the Certified Tax Rate of 1.51.