City knee deep in rate hikes

There seems to be no end in sight to rising taxes and fees in the city of Chattanooga, one local businessman says.

Steve Taylor, general manager for Southern Advertising, said he pays more than $7,400 in property taxes every year. Then this year, his company’s water quality fee shot up $592. And last year alone, Southern Advertising paid more than $17,000 in sign permit fees, he said.

If the city decides on a property tax increase this year — which some city officials have said is a possibility — things would only get worse, he said.

“My point is, when is it going to stop?” Mr. Taylor asked. “It’s a burden on our industry. The impact is: It’s survival.”

The City Council is in the midst of approving more than 150 increases on city permits.

In the last week, the city of Chattanooga has raised or talked about raising three types of fees and the property tax rate.

In addition, on Jan. 1, the sewer fee went up an average of 70 cents a month per customer. And last October, the water quality, or stormwater, fee shot up on homeowners from $36 a year to $115.20 a year. Since then, city officials have been in negotiations to lower the fee.

Last week, Mayor Ron Littlefield talked about the possibility of a property tax increase, but how much it would be or if it will even happen is still being discussed.

“Anytime you raise fees, there’s certainly an outcry,” Mr. Littlefield said this week. “It’s been a long time since the city raised much of anything.”

City officials have said that many of the fees being raised have not been increased in years. The water quality fee was last raised in 1993, and many of the permit fees were last raised in 2002, city records show. The last property tax hike was in 2001, records show.

The sewer fee has been raised incrementally since 2002, going up 3 percent to 6 percent each year since that time, city records show.

Roger Tuder, president and CEO of the Associated General Contractors of East Tennessee, said businesses now have all kinds of hands “sticking out” and asking for money, but there is just so much they can pay.

“Some of these fees, some business owners just can’t take,” he said.

City Council Chairman Jack Benson said he realizes businesses are hurting, but the city is hurting as well. The city has not received as many federal and state grants this year as in years past, he said, leaving it dependent on sales tax, which has gone down as the economy tanked.

The city needs revenue to keep its services and, unfortunately, that means raising its rates, he said.

“It leaves us with no option,” Mr. Benson said.

If the property tax does go up, it could go down at a later date, he said, which happened in the 1990s.

But the economic boom of the mid-2000s left the city financially sound, he said, and there wasn’t much talk about raising any rates because of the strong sales tax collections, he said.

“Maybe we made a mistake,” he said. “We were living on a good economy.”

The sewer rate is the one fee that has consistently increased over time, and Jerry Stewart, director of waste resources for the city, said it was planned that way.

“It’s better to take a small bite,” he said. “That’s what we’ve been doing.”

An advisory board helps get the word out about the incremental sewer rate increases to interested parties, Mr. Littlefield said, and also helps advise on where the rate should be set.

He said the water quality, or stormwater, program also has an advisory board, but for some reason it didn’t work as well. City officials said it is because the stormwater fees were gradual and the stormwater was not.

Ray Childers, president of the Chattanooga Manufacturers Association, said the sewer fee has never been a “surprise.” He’s been told well in advance and been able to go to his members with the information.

But now, there are more and more companies struggling to meet payrolls, he said. They are seeing increases in labor, material and health costs, he said, and more fee increases will only hurt.

“Any fee increases make a weakened company,” he said.

Councilwoman Carol Berz, chairman of the City Council’s Budget, Personnel and Finance Committee, said Chattanooga has its own costs as well, such as materials and health insurance, and those are also going up.

And the city is doing more than just looking at raising revenues, she said. “We’re seriously looking at all the belt tightening we can.”

City officials said they would not have more details on what can be cut until the budgeting sessions begin in May.

Mr. Taylor said the sign advertising business has been in Chattanooga since 1910. But the increasing fees and taxes make him think twice about relocating. If he had the chance, he’d look toward Georgia where taxes are much lower, he said.

“If I could, I’d move out of the city,” he said.