Chattanooga’s City Council members had made it clear over the past week that they would propose cuts Tuesday to Mayor Ron Littlefield’s recommended annual budget and the 64-cent property tax increase on which it was built. But from the tone of the meeting, council members seemed rattled by tax protesters and more prepared for a chopping party than for a serious discussion of how to trim the budget responsibly. Council members owe the city more constructive work.
The city has gone without a tax increase for eight years. In that period, the city has had its revenue diminished by inflation and rising costs as much as any family or business, and has had to resort for two years to funding operating needs partly out of the rainy-day fund. As a consequence, it has accumulated serious unmet needs. These must be addressed if city government is to maintain the infrastructure, capital investments and amenities that are needed to keep the city moving forward and economically competitive in the search for new businesses and jobs.
Mayor Littlefield has reasonably proposed new funds to address a range of needs. These include the hiring of dozens of needed police officers, and 26 firemen to staff the new firehall promised for the Enterprise South facility and the Volkswagen plant. He also would give city employees a modest raise, relieve the freeze on hiring, fund some gang-suppression initiatives, plug the revenue gap that has widened over the past two years in the recession, and support other city commitments.
Despite what some tax protesters apparently believe, the city’s growth can’t be financed on a stagnant tax base. Growth in the tax base through new homes and businesses takes years to amortize the upfront investment in infrastructure that it costs to sustain growth and keep the city’s economy and job base on track.
The city, moreover, receives no new net income after county reappraisals — the other myth that stokes resentment of periodic increases.
True, some properties have increased more in value relative to others in the city, and thus incur higher tax bills for some residents and businesses even without an actual increase in the property tax rate. But because state law requires a resetting of the property tax rate to be certifiably revenue-neutral for the existing property tax base after a countywide property reappraisal, the city’s net tax revenue on existing property remains the same overall after a reappraisal program is completed.
Given these restrictions on revenue growth, city government is no more immune to the pressures of price increases in fuel, energy, asphalt, cement, tires and medical and insurance costs than are households and businesses. Just as businesses raise prices and wages to workers, local governments must raise the property tax occasionally to keep up with inflation in necessary purchases and to make needed investments in infrastructure.
The question is, how much should they raise taxes in a weak economy, and what should they do without.
Some of the cuts tossed on the table Tuesday are flatly unreasonable. Councilman Deborah Scott would close the venerable Memorial Auditorium, one of the city’s premier venues for a range of public events. She would cut Outdoor Chattanooga, which lures residents and tourists. She would sell The Chattanoogan and the Summit Softball complex, combine the Parks and Recreation Department with the Department of Education, Arts and Culture, reduce cleaning schedules and continue the freeze on wages and incentives. Various other council members would cut other services and in-lieu-of-wage incentives, such as take-home police cars, which serve a useful purpose.
Council members obviously have been swayed by anti-tax protesters and a Tea Party rally. But even in an economy pulling slowly out of recession, council members must approach the city budget more responsibly than Tea Party protesters would have them do. They are elected to make responsible decisions, and occasionally to raise taxes.