Mayor asks for 64-cent property tax increase

Mayor asks for 64-cent property tax increase

May 19th, 2010 by Cliff Hightower in News

Mayor Ron Littlefield proposed a 64-cent property tax hike Tuesday that would fund a $198.6 million budget and bring tax rates to a level not seen in nine years.

"The revenues tell a sad story," he told council members Tuesday in a conference call. "Over the last two years, we've lost almost $9 million. That's a dramatic decrease."

Mr. Littlefield's budget would fund expansion of the Chattanooga police department, bring in money to fund 128 city employee positions frozen last year and put almost $4 million toward raises for city employees.

Staff photo by Dan Henry/Chattanooga Times Free Press - New home construction has recently restarted at the end of the street in the Stonewall Farms subdivision.

His budget also calls for opening recreation centers for normal hours, funding 26 firefighters for the Enterprise South fire hall that will serve the Volkswagen plant and expanding the contract with Tri-Community Volunteer Fire Department to provide fire service for recently annexed areas.

The tax rate would go from $1.94 per $100 of assessed value to $2.57 per $100 of assessed value, or a 33 percent increase. The last time the City Council passed a property tax increase was Sept. 11, 2001, when it hiked tax rates 50 cents. At the time, it was $2.51 per $100 of assessed value. It since has come down to its current rate after two citywide property tax assessments.

City officials said the extra revenue is needed to help plug a $32.2 million gap between revenues and expenditures. Over the last two years, the city has lost $8.9 million in revenue with all sources of revenue down, except for property tax, records show.

But council members, who will be deliberating the budget in coming weeks, said afterward they did not know whether they could swallow a 64-cent increase. Councilwoman Deborah Scott said she was "in shock" to see such a budget.

"If that came before us tonight, it would be voted down by me," she said.

Councilman Jack Benson said he had no idea the mayor would ask for a 64-cent increase.

"It was more than I anticipated," he said. "I guess the work is in front of us."

Councilwoman Carol Berz, chairwoman of the council's Budget, Personnel and Finance Committee, said the council will meet again next week to begin the debate on what could be cut from the budget.

"That was just a first step," she said. "Next week will be when the interesting conversations take place."

WHAT IT PAYS FOR

Besides salaries and hiring, the mayor's budget includes a youth development program that emphasizes positive alternatives to gang activities, enhanced street maintenance, money for a new recreation center at Hixson Middle School and support for technological advancements, including a citywide wireless network.

It also funds a fully staffed in-house legal department, increases to employee pension benefits and more than $6 million for Other Post Employment Benefits.

Other Post Employment Benefits is a new federal mandate that sets up a fund for city employees similar to a pension fund, officials said. The city has paid "as you go" for the fund in the past.

Daisy Madison, the city's chief financial officer, gave council members an almost hour-long presentation on the budget. Mr. Littlefield could not attend because his wife had undergone surgery.

Ms. Madison laid out the budget and said she felt the raises were "justified."

"This is the most difficult budget I've had to work with since I've been with the city," she said.

Ms. Madison said the city has tapped into its rainy day fund over the past three years, going from a $45 million windfall in 2007 to a projected $27 million this year.

OTHER INCREASES

Additional costs went up on city services this year for residents, as well. Those include:

* $285: The average yearly sewer bill, up from $276.60 last year

* $115.20: The fee for the water quality, or stormwater, fee, up from $24 or $36 a year, depending on the size of the home

Source: Times Free Press archives

REVENUE CHANGES

City revenues showed a history of increasing then started a downward trend two years ago, records show. Revenues were:

* 2006: $159.7 million

* 2007: $167.7 million

* 2008: $173 million

* 2009: $167.6 million

* 2010: $164.9 million (projected)

Source: Chattanooga

The pay plan, implemented in late 2008 and early 2009, receives a boost with $1.9 million in cost-of-living raises, $1.9 million in performance pay and $2.1 million for police and fire salaries.

WHAT CAN BE CUT

Mr. Littlefield told the council he expected the budget to be "massaged" by council members. City officials gave the council a separate list of options of what could be cut.

The list included reducing the allocation to the Chattanooga-Hamilton County Regional Planning Agency, the Chattanooga Area Regional Transportation Authority, delaying part of the pay raises, restricting employee take-home car privileges and not hiring more police officers and firefighters.

"There are all hard decisions," Ms. Madison told the council.

Sgt. Craig Joel, vice president of the Fraternal Order of Police, said after the meeting he had mixed emotions about the proposed budget. The proposed budget adds 40 police officers and 15 civilian police workers.

But he said those things also are on the chopping block as cutting options.

"The bare minimum has been met, but those are also the first listed to be cut," he said.

He said he expects a battle within the City Council this year, especially since the department requests seem lengthier than usual.

"We'll fight for what we can get," Sgt. Joel said.

Click here to vote in our daily poll: Should property taxes be raised to fund law enforcement?

Continue reading by following these links to related stories:

Article: Hitches few in budget process

Article: City faces tax hike to close fund gap

Article: Local agencies ask for $8 million more from city, county