Hamilton County Commission denies loan to Red Bank after property assessor error

Red Bank will not get help from Hamilton County to account for a revenue shortfall this year after a proposed loan was denied by the County Commission.

The loan would have provided about $400,000 to the city after Hamilton County Property Assessor Marty Haynes made a mistake calculating Red Bank’s certified property tax rate as less than it should have been. The loan to the city would have been paid back over a decade with no interest.

The proposal was brought forward by Commissioner David Sharpe, D-Red Bank, and failed 6-5. An amendment from Commissioner Steve Highlander, R-Harrison, lessening the loan’s amount to $350,000 and shortening the time to four years also failed 6-5.

“My big issue with this is that the residents of Red Bank have gotten a tax break that we’re being asked to subsidize,” said Commission Chair Ken Smith, R-Hixson.

The mistake will cost the city about $800,000 for its current fiscal year — alongside lower-than-intended property tax rates in Red Bank, even after an approved tax increase earlier this year.

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The city will institute a hiring freeze at the beginning of 2026 and likely delay several long-term goals, like major road, bridge and trails projects, over the course of the next year because of the shortfall, said Martin Granum, Red Bank’s city manager, during the meeting.

There also won’t be consideration for some mid-year goals, which could have included raising police and fire starting salaries, he said, to keep up with Chattanooga’s recent pay increases.

Several county commissioners expressed concern that if they approved a loan for Red Bank, they were setting a precedent to bail out cities in fiscal trouble.

“You do it for one, remember, you’ve got to do it for all,” said Commissioner Gene-o Shipley, R-Soddy-Daisy.

At least one Red Bank resident didn’t see it the same way. Former school board member Kathy Lennon pointed out during public comments that commissioners weren’t mentioning the fact that Red Bank’s financial issue was caused by a county employee.

“The assessor basically screwed it up six ways to Sunday,” Lennon said. “He admitted it. He openly took the blame.”

Red Bank Mayor Stefanie Dalton said during an interview after the meeting that the commissioners’ comments opposing the loan were insulting. The city was not looking for a complete backfill of the county’s mistake — officials were willing to tighten the city’s belt and push forward, she said. The loan would have given the city some more wiggle room to keep some offices fully staffed and projects ongoing, she said.

(READ MORE: Polluted stream in Red Bank to be restored)

Taxpayers “were promised certain things in our budget this year that we will now not be able to deliver on,” Dalton said. “The Hamilton County Commission is making a joke of our neighbors. They’re the ones who are going to be punished. It’s not right.”

Sharpe said he was angry and disappointed by the lack of support from other commissioners for the loan. He would be willing to help out other cities in districts other than his own if a similar mistake was made, he said.

“The good people of the city of Red Bank have fallen in the bull’s-eye of political attacks,” Sharpe said after the meeting, referring in part to County Mayor Weston Wamp’s recent critiques of the city. “Their taxation has been questioned multiple times, but that same question has not been raised or criticized for other municipalities who have sought additional revenue to provide services for their community.”

To keep governments from getting a windfall when property values rise, city and county tax rates are supposed to be recalculated to be “revenue neutral,” or set so that cities get the same amount of revenue despite the higher home values. Hamilton County home values are assessed every four years, with the most recent assessment occurring this past year.

(READ MORE: Hamilton County municipalities set property tax rates)

During an October meeting with Red Bank officials, Haynes said he had used values from the wrong year to calculate new numbers — 2021 instead of 2024.

That error resulted in a certified tax rate of $0.90 per $100 of assessed value, lower than the correct certified rate of $1.08 per $100 of assessed value that should have been provided to the city, according to Granum. As a result, the mistake will cause property taxes to be hundreds of dollars lower on an average Red Bank home.

On a $300,000 home, the annual city property taxes on the correct certified rate would be $810 a year. The erroneous certified rate used by the city would mean annual taxes on that same home would be $675 a year.

After a city 9-cent tax increase was approved by the Red Bank City Commission in August, the annual city property taxes on a $300,000 house will be $742.50 — still lower than what the correct certified rate would have resulted in.

Contact city and county reporter Siena Duncan at sduncan@timesfreepress.com or 423-757-6354.