UPDATE: Chattanooga City Council approves 2018 budget by 8-1 vote on first reading

City Finance Officer Daisy Madison, center, discusses the state's senior tax freeze program with the Chattanooga City Council.
City Finance Officer Daisy Madison, center, discusses the state's senior tax freeze program with the Chattanooga City Council.

UPDATE: The Chattanooga City Council has approved 2018 budget by 8-1 vote on first reading. Councilman Chip Henderson voted against the measure.

As with all city ordinances, the council must vote on the budget ordinance a second and final time. The council votes again on Sept. 12.

ORIGINAL STORY: The Chattanooga City Council says it is prepared to vote on Mayor Andy Berke's 2018 budget proposal, which calls for raising taxes almost as soon as it drops them.

The state requires Chattanooga to lower its existing tax rate from $2.3090 per $100 of a home's assessed value down to $2.0573 per $100 of assessed value to keep the city's overall revenue level the same after the recent countywide property reappraisal. State law prohibits local governments from simply bringing in more money just because property values go up.

Berke has asked the council to come within 3 cents of resetting the tax rate to where it is today: $2.277. That comes out to a 21.97-cent increase over the state certified rate. Since Chattanooga property values have increased by an average of 10.9 percent, tax bills are expected to go up.

The reconfigured tax rate will generate more money to help pay for major budgetary challenges, especially underfunded police and fire pensions, city financial officials have said.

In the council's last budget workshop today, Council Chairman Jerry Mitchell voiced concern about managing these costs.

"We are getting ready to spend between $13 million and $15 million more this year on benefits, salaries, those type of related things and pensions," Mitchell said. "I don't think we can afford to do hat again next year."

Mitchell's statement echoes a stance he voiced when the council began its review of the $253 million operations budget proposal five weeks ago. He called on his colleagues to try to figure out ways to avoid the situation again.

No council members have said publicly whether they will vote for or against the budget, which also calls for the city to adopt the state's tax freeze on property program for qualifying seniors. Council Vice Chairman Ken Smith has pushed for the city to consider the option.

City Finance Officer Daisy Madison said implementing the program this year would not impact revenues. It will only make a difference for program participants should the city raise taxes again.

"I think we have a tremendous amount of boldness in this budget and a lot of hope in this budget," Councilman Darrin Ledford said, adding the council needs to hold the administration accountable on the budget's promised outcomes.

Other budget highlights include an extra $1.2 million to modernize the city's information technology infrastructure, 14 new positions for the police department's gun investigation unit, and new positions to oversee or coordinate workforce development, rehabilitation of unused industrial sites and strategic capital planning.

Councilman Erskine Oglesby said he appreciated the budget workshop process the administration has undertaken with the council since Aug. 1. Like Mitchell and others, he said he believed next year's budget may need some tweaking as they go along.

"I think it's hard for anyone to take a stand, especially when they're new, because there are so many competing interests," Councilwoman Carol Berz said of the new council members and the budget process.

Councilman Anthony Byrd -one of the newcomers to the council - said he was not pleased with 100 percent of the budget, but also praised the process, describing it as "great schooling."

"One thing I want to make sure is that we are ready to vote tonight," Councilman Chip Henderson, chairman of the council's Budget and Finance Committee, said. "Obviously, you don't ever get everything that you want with a budget."

The council meets at 3 p.m. to discuss today's voting agenda, which includes the 2018 budget proposal. The council voting session starts at 6 p.m. Both meetings will be held in the Council Building at 1000 Lindsay Street.

Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow him on Twitter @pleach_tfp.

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