Chattanoogans are one vote away from taking on a tax hike.
Over the last five weeks, city financial officials have outlined several money challenges in the 2018 fiscal budget, including police and fire pension commitments, providing competitive salaries, modernizing the city's technological infrastructure and boosting citywide paving services.
In all, the city needs $253 million to meet its operational expenses, a $23 million increase over 2017.
With the passage of the 2018 budget ordinance on its first reading Tuesday night, approved by an 8-1 vote, the council will vote a second and final time on Sept. 12. As with all city ordinances, it takes two council votes. The council will hold a public hearing and vote at its 6 p.m. meeting.
Before the vote, Chattanooga Chief Operating Officer Maura Sullivan described the budget as a marriage of priorities of the mayor's office, city council and citizens.
Councilman Chip Henderson, who cast the only "no" vote, said it came down to the wishes of his constituents. Henderson represents District 1, which includes Lookout Valley and portions of Mountain Creek and Hixson.
"The people I talked to made it very clear they didn't want a tax increase," Henderson said after the meeting.
While the new tax rate actually shaves 3 cents off the existing tax rate of $2.3090 per $100 of a home's assessed value, tax bills are still expected to rise because Chattanooga properties' assessed values went up an average 10.9 percent in value after the recent countywide reappraisal.
State law prohibits local governments from earning more revenue just because property values go up and provides them with certified tax rates to ensure they keep their tax revenues level. In Chattanooga's case, that certified tax rate is $2.0573 per $100 of assessed value.
However, Mayor Andy Berke asked the council to move the rate to $2.277 per $100 of assessed value, representing a 21.97-cent increase over the state's certified rate.
The budget also calls for Chattanooga to adopt the state's tax freeze program for qualifying seniors, a move council Vice Chairman Ken Smith has pushed the city administration to consider.
Earlier in the day, City Finance Officer Daisy Madison told the council implementing the program would not affect revenues in the 2018 fiscal year. It will only make a difference for program participants should the city raise taxes again.
Henderson did like parts of the budget.
"Of all the budgets, to vote 'no' on, I have advocated for $5 million in paving since I was elected four-and-a-half years ago," he said.
Henderson, chairman of the council's Budget and Finance Committee, said the decision to hold a public hearing for the budget ordinance on its second reading instead of the first reading came at the advice of the Tennessee Comptroller's Office. It came down to the possibility that council members might have amended the ordinance during the first reading, making it a different budget than what would have been read at the public hearing.
"We know what we're getting on the second reading," he said.
Berke touted the benefits of the 2018 budget in an announcement marking the council's vote.
"Our investments are leading to a growing prosperity and quality of life," he said. "This budget makes key investments in safety, families, neighborhoods and our economy, which will continue to move Chattanooga forward."
Several council members voiced concerns during their last budget workshop meeting earlier in the day.
"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," Council Chairman Jerry Mitchell said. "I don't think we can afford to do that again next year."
"I think we have a tremendous amount of boldness in this budget and a lot of hope in this budget," Councilman Darrin Ledford said, asking his colleagues to hold the administration accountable on the budget's promised outcomes.
Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow him on Twitter @pleach_tfp.