Signal Mountain will not have a property tax increase, but it will be funneling fewer dollars toward paying back its debt for Signal Mountain Middle High School, according to the first reading of the town’s budget passed Monday night.
The Town Council voted 3-1 Monday night for an adjustment that would do away with a proposed 15 cent tax increase and instead would redirect a greater portion of the town’s revenue from property taxes toward the general fund instead of its debt obligations for its 2008 construction.
Signal Mountain’s current tax rate is $1.51 per $100 of assessed value. For the past few years, the town has designated 30 cents of that rate to pay off the school debt. That amount now has been reduced to 19 cents.
Town Manager Honna Rogers said that amount will satisfy the minimum amount that needs to be paid back to the Tennessee Municipal Bond Fund per year, but will mean it could take until 2021 — which could mean approximately $150,000 in interest payments.
“If revenues do come in higher each year, we will very likely direct additional money toward the school debt,” Rogers said.
The measure will be the chief method the city plans to confront a $317,000 deficit for the upcoming year.
The council had flirted with the idea of a property tax increase after receiving sharp criticism of a proposed garbage fee in earlier drafts of the budget.
Of the handful of residents in attendance, only Bruce Caldwell spoke out against the tax increase.
“My costs are going up; everyone’s costs are going up,” he said after the meeting. “The fact that they were thinking about levying a tax with the recession and everything just seemed out of whack.”
Mayor Bill Lusk and Councilmen Bill Wallace and Dick Gee voted for the measure, while Vice Mayor Susan Robertson opposed it, saying the town should prioritize its debt to avoid interest payments.
Councilwoman Annette Allen was absent.
The move still left a $109,000 shortfall, leaving the council to pare down other items such as city employee benefits until the deficit reached $47,000 — a sum council voted to take out of the town’s reserves.
Caldwell said he was satisfied with the council’s resolution, even if it meant a delay to paying off the school’s debts.
“I’d like to pay off my debts early, but they were talking about taking money from a lot of people during a rough time in order to do that,” he said.
The council will vote on a final reading of the budget June 27 at 10:30 a.m. There will be an opportunity for public comment beforehand.
Contact staff writer Kate Harrison at kharrison@times freepress.com or 423-757-6673.