The Chattanooga City Council gave a thumbs-up to Mayor Tim Kelly’s proposed budget for the upcoming fiscal year, passing its first step to ultimate approval.
During a Tuesday night meeting, council members voted unanimously in favor of the budget for the 2026-27 fiscal year, which starts July 1. The $394 million operating budget includes a 3% raise for city employees — though the city’s staff union asked for 5% in early June — and no property tax increase. During budget meetings, several department heads told the council they had worked on finding places to make cuts to accommodate the raises.
“This fiscal year ’27 budget balances the scales and manages our momentum without a tax increase,” Kelly said during the meeting. “We will have demonstrated our belief in the people who serve our city.”
Since 2020, city employee starting salaries have increased by 46%, Kelly said.
Still, some employees who are part of the union spoke during the public comment period of the meeting. They asked council members to reconsider the union’s ask and offer higher pay.
Robin Nixon, of the city’s wastewater division, said during the meeting that she has to work two jobs to make ends meet.
“I don’t want to work seven days a week,” she said. “Five percent would go a long way.”
Altogether, safety and public works make up 59% of the proposed operating budget. The Chattanooga Police Department will see the greatest increase, $5.5 million, and the Fire Department will see a $4 million increase. The two departments remain the highest funded across city government.
(READ MORE: Chattanooga tripled number of employees making six figures in 2025)
Among some changes made to the proposed budget, council member Jenny Hill of North Chattanooga got her request worked in to move dollars from one of the city’s affordable housing programs to a land trust nonprofit.
In early June, Hill asked for $750,000 to be moved out of the city’s down-payment assistance program, which provides up to $21,000 to qualifying homebuyers.
The money will instead go to the newly formed Tennessee Valley Community Land Trust, which will buy and own land homes sit on while residents own the physical house. The nonprofit will limit the amount those homes can sell for, with a goal of keeping selling points affordable.
Receiving the money should be contingent on the nonprofit raising $1.5 million on its own, Hill said during a meeting in early June.
Hill got pushback from fellow council members Raquetta Dotley of Alton Park and Marvene Noel of Orchard Knob, the latter of whom called the land trust concept “plantation mentality.”
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Other changes to come include fully restored funding for local nonprofit ArtsBuild, according to council member Dennis Clark of Cherokee Woods.
ArtsBuild was originally facing a $65,000 cut in public funding from both Hamilton County and the city of Chattanooga. The Hamilton County Commission approved its cuts last week to the nonprofit, which promotes and funds arts education and organizations.
But Clark said during the meeting that it’s the intent of the city to fully restore its share of funding. The city provided about $270,000 to the nonprofit during the 2025-26 fiscal year. The proposed budget for the upcoming fiscal year would have shaved about $35,000 off that contribution.
Clark said interest earned on pandemic relief funds in the bank will now make up the difference, and the nonprofit will receive $270,000 once again.
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Contact city and county reporter Siena Duncan at sduncan@timesfreepress.com or 423-757-6354.
