Soddy-Daisy residents will see their property tax rate increased by 32 cents and could likely see another 5- or 10-cent raise next year.
"Each penny [of property taxes] is worth $23,000 in revenue," said City Recorder/Finance Director Burt Johnson. "I would think the city would have needed a $1.25 property tax rate to create a three-month reserve for operating expenses. The main people that would have been hit would be people living in a $150,000 or more home. In this area the majority of homes are $130,000 or less."
City Manager Hardie Stulce had originally asked to bring the rate up to $1.25, but commissioners felt the measure too costly for residents at this time.
The commission plans to vote on the budget's second and final reading June 2 at 7 p.m. at Soddy-Daisy City Hall.
Johnson said the property taxes will go toward purchasing a couple of police cars, a backhoe and snowplows for Public Works, new traffic lights and widening Dayton Pike. He said the city will need to pay for equipment upgrades in general for fire and police departments too. At the $1 rate there will not be enough money left over to pave roads, he said.
"We do have a balanced budget this year, but if we don't have a property tax increase then we would have to look at deleting city services next year," Soddy-Daisy Mayor Jim Adams said in regards to the necessity of the increase.
The $1 rate will bring about $730,000 in additional revenue to the city, said Johnson. The current rate brings in about $1.5 to $1.6 million total. Taking the rate up to $1.05 property would bring $835,000 in additional revenue to the city; a $1.25 property tax rate would bring in an additional $1,300,000, he said.
Johnson said the city pays $500,000 per year for sanitation service alone, which comes from property tax revenues.
"Even when home values were higher, the city of Soddy-Daisy reduced the tax rate so citizens would not pay more than they were," said Johnson. "It cost the city a couple hundred thousand dollars per year to do that. We feel the need for additional revenue. We need a reserve for unforeseen expenses."
Commissioner Geno Shipley said the city of Soddy-Daisy has one of the lowest property tax rates of any Hamilton County municipality. The only municipalities with lower rates are Lakesite and Walden, he said.
"If we don't do something to build our city right now, then property taxes will be the only way to gain," said Shipley. "We should have kept our taxes what they were. We tried to accommodate people for years to keep taxes down."
Local municipalities and how their property tax rates compare with Soddy-Daisy:
• Red Bank - population 11,651 - property tax rate of $1.10 per $100 of assessed evaluation.
• Collegedale - population 8,282 - property tax rate of $1.16 per $100 of assessed evaluation.
• Signal Mountain - population 7,554 - property tax rate of $1.50 per $100 of assessed evaluation.
• East Ridge - population 20,979 - property tax rate of $1.12 per $100 of assessed evaluation.