Where things stand ahead of Chattanooga’s tax rate vote

By William Newlin

Chattanooga City Council sessions often attract a small number of residents scattered around the Lindsay Street meeting room. At the Aug. 19 public hearing on Mayor Tim Kelly’s proposed $1.93 tax rate, Chattanoogans filled every seat. 

Many were police officers and firefighters gathered in support of the mayor’s tax plan, which would add $45 million to the budget passed in June and provide millions for police and fire salaries, new public safety positions, and more for the departments.

But a couple dozen non-uniformed community members lined up behind the speaker’s podium to share their thoughts with Council, and they offered a range of views.

Two proposals

Officials have said the mayor’s proposed rate, which is 32 cents lower than the figure over the last four years, would still cost the average taxpayer about $34 more per month due to property value gains.

City Council members Chip Henderson, District 1, and Jeff Davis, District 3, have sponsored an alternate, $1.69 tax rate that would carry an estimated $12 to $18 monthly tax increase.

The opposing plan will have its own public hearing on Aug. 26, and both proposals will be up for vote during Council’s Aug. 26 business meeting. An ordinance must receive a majority of “yes” votes at consecutive meetings to take effect.

See the two plans and Council members’ reaction to the Henderson-Davis proposal in the story below.

In favor of $1.93

On Aug. 19, some community members voiced support for the tax hike both to boost police and fire salaries and to fund a host of other items attached to the $45 million budget supplement, such as $7.5 million for paving, $3 million for downpayment assistance, and $2 million for parks maintenance.

The mayor’s office has highlighted the need for those additional dollars to overcome the impact of inflation on city costs.

Ernest Reid, pastor of Second Missionary Baptist Church in District 9, agreed.

 ”When it comes to the management of fiscal affairs, I would give you some unsolicited advice that my father gave me as a young man,” Reid said to Council members. “That being: ‘You can keep up better than you can catch up.'”

“Public safety is compromised when firefighters are forced to work multiple jobs on top of their department shift,” said Catalina Kay, who described herself as a “mother, a fire wife, and a Chattanoogan.” 

Kay’s husband serves at Station 21 in East Brainerd. Aside from raising salaries, the $1.93 tax rate would also pay for a new ladder truck and additional staffing at the station.

Against $1.93

Opponents of the mayor’s proposal focused on the financial impact of a tax increase on working families and seniors with limited incomes.

City Council recently increased the income limit for seniors to apply for an exemption to city property tax increases. But because of a state-mandated deadline on “tax freeze” applications, it’s too late for those homeowners to lock in their 2024 tax bills. Even if they apply now, their upcoming bill will reflect the rate Council chooses on Aug. 26.

Seniors can freeze their taxes at the 2025 rate each year going forward, but like all Chattanoogans, they won’t see a tax decrease unless City Council approves a lower rate in the future.

Multiple speakers requested that Council members negotiate a compromise rate to reduce the burden on taxpayers. 

Henderson and Davis’ $1.69 plan, while lighter on residents’ wallets, drew pointed criticism from some of their colleagues. The biggest disagreement was over $8 million in non-specific budget cuts that the mayor’s office would decide. 

“I would just ask y’all to come together and roll up your sleeves and do a little bit more hard work,” said Joe DeGaetano, a personal injury attorney from District 2. “Because we can take care of fire and police. We can also take care not to jack up prices on everything in this city.”

William Lloyd, a retired District 4 resident, suggested the city dip into its general reserve fund to address the mayor’s priorities.

Chattanooga’s rainy day fund reached a record-high $153 million in June 2024. Since then, officials have withdrawn $65 million from the bank to increase last year’s operating budget, shore up police and fire pensions, and fund infrastructure projects.

“Rhetorically, how has this government allowed that much of a war chest to accrue when the needs for public service and our public servants are so obvious and have been known for years?” Lloyd said.

The decision ahead

In a City of Chattanooga press release on Aug. 21, senior advisor to the mayor Eric Holl blasted Henderson and Davis’ $1.69 proposal as “the worst of both worlds.”

“It makes painful cuts to city services and would still result in a significant increase in property tax bills,” Holl was quoted in the release.

Henderson has taken issue with the $45 million supplemental budget generated by the $1.93 rate. In an interview with Chattamatters, he said the mayor’s office had agreed to fund only police and fire raises rather than propose the larger package with money for roads, new police vehicles, Fire Station 21, and parks.

“So, basically what I did was exactly what the administration had told us they were going to do, and what my district has told me they wanted me to do,” Henderson said.

The $1.69 plan provides the same amount for public safety salaries as the mayor’s proposal. But it eliminates every other item in the administration’s budget supplement — including other police and fire expenses — and calls for the $8 million budget cut.

Cuts would impact 311, violence intervention and job training programs, internal auditing staff and more, per the city’s Aug. 21 release. Henderson suggested the administration allow individual department heads to decide what they can lose from their budgets and highlighted budgeted but unfilled staff positions. 

“That’s good management,” Henderson said. “That’s the way you manage that.”

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Contact William at william@chattamatters.com