Hamilton County assessor's office certifies lower property tax rates, but cities don't have to abide

Property values are up in Hamilton County, from an average of 12.4 percent at the high end in Red Bank to 5.9 percent at the low end in East Ridge.

Individual homeowners already know if their property assessments have gone up - those letters were sent in the spring by Assessor of Property Marty Haynes' office.

And now, homeowners can calculate - or at least get an idea - whether or not their property tax will go up. Haynes released this week the certified tax rates, informally known as the "rollback," for Hamilton County and the municipalities inside it that levy property taxes.

The "rollback" occurs when the average home's value increases in a city or county.

For example, Hamilton County's overall property assessment went up by about 10 percent. So, under state law, the county's portion of the certified property tax rate gets rolled back by the same amount, about 10 percent.

That way, there's no property tax increase for the average homeowner.

"Eighty percent of the properties in Hamilton County went up less than 20 percent," Haynes said. "Most folks are not going to see a big change in their tax bill, if local governments [accept] the certified tax rate."

But once the certified tax rate is released, it gets a little complicated.

For one thing, Tennessee cities and counties don't have to accept the rolled-back property tax rate.

And even if a city does accept the rollback, homeowners are going to pay more property tax if their assessments are above average, especially if the property value has sky-rocketed.

To rollback or not to rollback?

Cities that don't accept the rollback usually opt to keep the property tax rate the same as it was in 2016. Which, in effect, is a tax hike, since the average property value has gone up. But officials who sustain the current rate often will argue they're not hiking taxes because they're keeping the rate the same.

Hamilton County will stick with the rollback. County Mayor Jim Coppinger already presented to county commissioners the proposed $691.5 million fiscal 2018 budget, which does not call for a tax increase. That means the county will roll back its tax rate by about 10 percent from 2.7652 in 2016 to 2.4976 in 2017 per $100 of assessed value.

But the county property tax rate is only part of the total; it's added onto city tax rates.

So which cities will roll taxes back here and which won't?

East Ridge, Red Bank and Collegedale plan to accept the rollback. Meanwhile, a number of cities propose to keep their property tax rate the same, or about the same, as last year, including Lookout Mountain, Signal Mountain and Soddy-Daisy.

"The big one in question is Chattanooga," Haynes said. "I don't know what Chattanooga is going to do. I really don't."

Chattanooga Mayor Andy Berke on Wednesday declined to rule out a property tax increase for the city.

"We're looking at what we need to do to fund the priorities of the city and we'll announce that with the budget next Tuesday," Berke said. "Our costs continue to go up for city government, just like they do for our citizens."

Above-average homes pay more

Even if you live in a city that accepts the rolled-back rate, your property tax may still go up - if your home had an above-average increase in property values.

As an example, imagine Chattanooga accepted the certified tax rate that calls for a roughly 10 percent rollback in Chattanooga's property tax rate. If you live in a North Chattanooga home that's gone up 40 percent in value, even with the 10 percent rollback, you'll see your city property tax bill go up 29 percent.

The phaseout of Tennessee's Hall Tax on investment interest and dividends is one reason why the cities of Lookout Mountain and Signal Mountain aren't sticking with the rolled-back property tax rate.

Signal Mountain plans to set its property tax rate around $1.56 per $100 of assessed value, which is about the same as last year, said City Manager Boyd Veal. That will help make up for a reduction from the Hall Tax, which has generated an average of $750,000 each year for the last three years for Signal Mountain.

Lookout Mountain, which has an annual operating budget of around $3.6 million, will get $155,400 in the current fiscal year by keeping property tax at $1.83 per $100 of assessed value, the same as last year, Town Consultant Dwight Montague said.

But the city can use the money, he said, because it expects to lose $100,000, annually, as the Hall Tax, a statewide tax on investment revenue and dividends, gets phased out.

When the Hall Tax was still 6 percent in 2015, Lookout Mountain got about $600,000 from it. That dropped to $500,000 this year, since the Hall Tax is 5 percent.

"It'll go down by about $100,000 each year," Montague said, until the Hall Tax is completely gone in 2022.

East Ridge's property assessments showed the least growth. But East Ridge City Manager Scott Miller said he's going to recommend to the City Council that it accept the rolled-back rate, because new construction has helped the city's bottom line.

"We're rolling back. That's what I'm proposing to the council," Miller said. "We can stay revenue neutral. We have a little over $10 million in new construction."

Contact staff writer Tim Omarzu at tomarzu @timesfreepress.com or www.facebook.com/MeetsForBusiness or on Twitter @meetforbusiness or 423-757-6651.

An earlier version of this story incorrectly said the rollback of the Hamilton County tax rate was 11 percent; it is actually 9.7 percent.