It's rare that citizens request a tax increase, but Signal Mountain officials say that's the sentiment the majority of constituents they've heard from have expressed.
On Monday, Signal Mountain Town Council voted to raise property taxes by 15 cents per $100 of assessed value during the town's monthly workshop meeting. The measure will come up for its second vote at the regular meeting in July.
The property tax increase raises the tax rate from $1.51 to $1.66 per $100 of assessed value.
The town has been paying 30 cents of every $1.51 per $100 of assessed value toward the debt incurred from the construction of Signal Mountain Middle/High School, 11 cents more than the minimum required.
The council had voted June 20 to leave the tax rate the same by channeling the extra 11 cents being paid on the school note into the general fund to help cover the deficit. This would have left around a $47,000 hole that would have then come from the general fund, based on the proposal at that time.
The change to the school debt allocation would have cost the town an additional $150,000 in interest and extended the life of the loan an additional four years, according to Town Manager Honna Rogers.
"In principle we'd be moving what some of our residents voted on to other things," said Mayor Bill Lusk.
Councilman Bill Wallace, who made the original recommendation to reduce the amount spent on the school debt, voted against the tax increase Monday, along with Councilman Dick Gee.
"It's kind of like school loans," said Wallace. "If you have extra money you make a payment. We don't have any extra money. It just seems like we're setting a precedent that anytime we get in a jam, OK, let's go raise taxes. In a way raising taxes is the easy thing to do rather than trying to come back to revenues and expenditures and figure out ways to generate more revenue for the town."
The town's fund balance is "healthy," siting around $3 million, which is nearly 50 percent of operating costs, according to Rogers. State law requires it to be at 35 percent as an "absolute minimum," but a good rule of thumb is 50 percent, Rogers said.
"That's what a fund balance is for, to cover a hole when you need to," said Gee. "I don't see that this case rises to the level of having a compelling reason [to raise taxes]. I don't think we're in a financial crisis."
Rogers said a tax increase is a longer-term solution and that without a tax increase, the town would likely face another shortfall next year and resultant talks of a tax increase or cutting of services.
"I'm just not comfortable saying I know of another way to cover the shortfall," said Lusk.
Rogers has previously estimated that revenues will not return to normal until 2017. Councilwoman Annette Allen pointed out that the fund balance is so healthy because of Hall income taxes, which are expected to start dwindling under new state laws, and prolonged maintenance, which has since become a necessity.
"I could understand if we thought the economy was suddenly going to recover, but economists are saying it's going to be a long, hard, slow road," she said. "Modest tax increases are going to be part of the solution."
Rogers also pointed out that solutions to other large town problems, such as building new sewers, would likely have to be put on the back burner if the school debt was extended since it impacts the town's borrowing power.