Some City Council members at a Tuesday morning budget hearing indicated they are balking at a large property tax increase and want to continue looking for reductions from the current budget.
However, all council members indicated they want the final budget to include a sizable pay increase for police and firefighters.
Also on Tuesday, the Kelly Administration unveiled a proposed supplemental budget that would include a 44-cent property tax increase from the rollback Certified Tax Rate. The increased tax payment on a median home would be $449. Mayor Kelly said the average cost to each Chattanoogan "would be a buck 23. It would be a 28.4 percent tax increase. It would raise about $50 million in new revenue for the city.
Kelly officials said it "will fund significant police and fire pay raises while lowering the property tax rate from $2.25 to $1.99 per $100 of assessed valuation.
"The proposal would represent the largest decrease in Chattanooga’s property tax rate in decades, while allowing the city to keep pace with 22.5 percent inflation since the last revenue change in 2021."
Mayor Tim Kelly said, "This is a balanced proposal that funds police and fire pay raises and critical government services like road paving while making a historic cut to the property tax rate. We have a generational opportunity to ensure Chattanooga is the city of its full potential; a city with safe neighborhoods, good roads, and the best quality of life. If we fail to act accordingly, we will lose our great momentum and fall further behind.”
The mayor said there also need to be steps taken to provide additional funding annually for the city to keep up with the Consumer Price Index.
Officials said additional funds from the increase would go for salary increases, new fire trucks, new police vehicles, paving and other items.
Council Chair Jenny Hill came up with $5.9 million in cuts, and Councilman Jeff Davis chided the Kelly administration for reneging on a promise to "roll up our sleeves and find 50 percent" of needed reductions to fund the first responder increases.
However, Councilman Dennis Clark said council members "should be ashamed" for not "capturing the growth" from a huge increase in local property values and keeping the tax rate at the former $2.25 per $100 of assessed valuation.
The Certified Tax Rate rollback moved it back to $1.55. It would take a council vote to raise it above that. The Certified Tax Rate is designed to generate the same amount of property tax revenue as was brought in prior to the property reappraisal.
Chair Hill said moving the rate up 70 cents to the prior $2.25 would mean citizens in her District 2 would pay an average $87 per month more for their property.
Councilman Davis started the budget meeting by recommending "that we start with additional savings before we look at a tax increase.
He said "capturing the growth" was "a fancy term for a tax increase."
Councilman Davis said renters make up roughly half of those who would be affected adversely by a tax increase. He said it would make it "even less affordable to rent" as landlords raise prices.
He said for property owners that their homes "are not liquid assets" that can be used for the higher tax payments.
Councilman Davis said of the administration stance that "having everything in the budget as a priority is having nothing in the budget that is a priority."
He said a possible cut would be to bring animal control "in house" instead of using the McKamey Center.
He recommended raising taxes only enough "to fund what is needed for the fire and police."
Chair Hill identified $77.4 million in the $345 million city budget that could be open for inspection for possible cuts.
She recommended trimming the community development budget from $11.1 million to $9.4 million - a 15 percent reduction.
She proposed cutting 10 percent of the City Council budget $99,666) and 10 percent from the mayor's budget ($771,898). In addition, she asked a five percent reduction from other city departments as well as a $500,000 cut in city job training. She said the latter cut would not include internships and apprenticeships.
Her cuts added to $5.9 million. She noted that the council earlier set aside $5 million toward the fire and police pay - bringing the total to $10.9 million to go toward fire and police salaries. She said a 12-cent tax increase could bring the extra money needed for first responders.
Chair Hill said, "If we make these cuts, I feel that we would come out stronger."
Councilman Henderson, who said he could support a "modest" tax increase, said a 12-cent tax rise amounted to an eight percent increase.
Councilman Clark, who was applauded by Councilwoman Marvene Noel, said the 12-cent approach "is cheap, and I'm not going to be cheap."
He said, "The cost of everything has gone up. Government costs have gone up."
Councilman Clark said people in his district were glad to contribute an average $37 per month toward the full 70-cent tax rise. He said, "I wish I could pay more."
Councilman Henderson noted that Sheriff Austin Garrett was able to give raises to his employees, though the county did not go above the Certified Tax Rate rollback.
He said a mechanism needed to be found to allow the pay of fire and police not to lag in the future. He said, "We can only deal with what we are brought. If there is a four-alarm fire this year, it must have been at least a two-alarm fire last year."
Councilman Cody Harvey said, "Fire and police have the hardest jobs in the city. I want them to be paid the most that we can."
Mayor Kelly, saying inflation has added $25 million to the city budget, said, "We've never had inflation like this in my lifetime. It's up 22 percent since I came into office."
He said paving costs "have gone through the roof. Paving alone is enough to choke a horse."
The mayor said, "We need to do the responsible thing to drive Chattanooga forward. If we go cheap, we're going to suffer. The question is are we going to make the necessary investments so Chattanooga can live up to its potential."
Chattanooga Police Chief John Chambers said, “Last week, I received a letter from a fantastic police officer, telling me that he had chosen to leave CPD and accept a position at a competing law enforcement agency in order to receive better pay. I know from speaking with our officers that many more will do the same if we don’t significantly increase pay now. Our officers love Chattanooga, and love serving the people of our city. But they have to be able to provide for themselves and their families.”
Chattanooga Fire Chief Terry Knowles, whose appointment is pending confirmation by City Council, said, “I want to thank Mayor Kelly for this supplemental budget proposal and also thank City Council for listening to us as we outlined our serious need for increased funding. Being a firefighter is one of the toughest jobs there is, but our men and women are struggling just to make ends meet. As more of our most experienced firefighters reach retirement age, we are at serious risk of losing our ability to adequately protect Chattanooga. I don’t want the day to come where we have to start figuring out which fire stations to close on which days because we don’t have the staffing.”