A bill that would have required a ballot measure for counties and cities to raise property taxes above a certain threshold died in committee Wednesday evening.
The bill was filed by state Sen. Bo Watson, R-North Chattanooga. Its language was met with intrigue from local officials and pushback from Chattanooga Mayor Tim Kelly when it was first introduced in January. Ultimately, when it crossed the desk of the state Senate’s committee that vets local government bills, it died because it didn’t have the votes, Watson said by phone.
“It’s a challenge,” Watson said. “People don’t like change, and particularly system changes. This is a big change in the system.”
For tax purposes, property is reassessed periodically. To keep governments from getting a windfall when property values rise, city and county tax rates are required by law to be recalculated as “revenue neutral,” or set so that cities get the same amount of revenue despite the higher home values. That revenue-neutral rate is called the certified property tax rate, and local governments have to go through a public process and vote on a revised tax rate if they want additional revenue.
The bill would have limited annual property tax increases to 2% above that certified rate, plus inflation. Anything higher than that would only go into effect if two-thirds, or a supermajority, of residents voted in favor of it.
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Every four years in Hamilton County, property values are reassessed. That means each city and the county get their new certified rates on a four-year cycle. The bill would have capped how much governments could revise the rate without triggering a referendum.
“We need to provide a way to give taxpayers and local governments predictability,” Watson said. “I’m committed to continue to try and work on that.”
The bill did not come to an official vote on the committee. Watson said he knew he didn’t have the five votes needed to pass that day, and he asked the senators on the board to move it into a subcommittee, effectively killing it.
“The family’s been called in,” he said during the committee meeting. “Life support has been removed from this particular bill. I think it’s time for it to rest in peace.”
Watson said he’s motivated to rework the bill and possibly introduce it during the next legislative session. The reservations his fellow lawmakers seemed to have were about the formula to calculate what would trigger a referendum, he said, since a percentage increase may not work for all areas.
For example, a county with a property tax rate of a nickel raising it to a dime would require a vote, he said. That could be addressed by creating a minimum certified rate that triggers the law itself, he said.
Watson filed the bill about five months after the Chattanooga City Council passed an increase in property taxes that amounted to 24% above the certified rate, which would have required a referendum under the bill’s language.
Kelly spokesperson Stephanie Cepak had written in a statement at the time that the bill would threaten cities’ abilities to provide public safety and fund basic services.
Smaller tax increases passed in summer 2025 by Lookout Mountain, Ridgeside, Soddy-Daisy and Red Bank would have also needed referendums — though Red Bank’s certified rate was miscalculated this past cycle as lower than it should have been.
Contact city and county reporter Siena Duncan at sduncan@timesfreepress.com or 423-757-6354.