Collegedale City Commissioner Tim Johnson said that when he left the commission's July 22 work session, he was leaning toward reducing the recently approved 39-cent property tax rate increase, a 31% increase from last year, by a dime, which would be a 23% increase from last year's rate.
After discussion at the work session, the commission instructed City Manager Ted Rogers to individually send a yes or no question regarding the potential change to the tax rate to the five commissioners by email July 23.
The commission voted 4-1 via email to leave the 39-cent tax rate increase in place, according to Commissioner Ethan White. White was the lone dissenting vote. City administration declined to confirm the vote total.
"I thought long and hard overnight and up until I sent the email to Ted, and I just came back to the place where I knew we had to do the important projects we had in place," said Johnson. "I didn't want to use fund balance."
Johnson requested the commission revisit the tax increase after citizens complained that the body did not provide enough time for input before unanimously approving the budget.
The commission announced the tax increase May 28 in a work session, in which commissioners are not allowed to vote and citizens are not given opportunity to comment. It was approved on first and second reading, during the commission's regular meetings June 3 and 17.
"It was good to have a further discussion in front of the whole community," said Johnson. "I know we followed the letter of the law in how we did it, but we can be more transparent. Following the letter of the law is not always good enough. We need to do a better job communicating what we are doing."
Rogers, who completes his 13th year as city manager in November, strongly recommended staying with the 39-cent tax rate increase. He said that while the city survived difficult financial years without raising taxes, with the exception of a 2011 increase to fund the purchase the former Ooltewah-Collegedale branch of the Chattanooga-Hamilton County Bicentennial Library, now was the time to increase revenue in order to keep the city moving forward.
Rogers said he looked six years down the road with commissioners when "strategically planning funding for the city." He said he told commissioners and citizens five years ago that the city would have to look at a tax increase in 2019.
He said the administration's strategy is to lower the new tax rate of $1.65 per $100 of assessed value following the next Hamilton County property reappraisal in 2021. With the expectation that property values in Collegedale will rise, Rogers told the commission that the law requires the city to lower its property tax rate to maintain the same level of revenue as the previous year.
Rogers said he anticipates the rate will then be raised back to $1.65 in 2025.
"It's a good, long-term plan for the city," said Johnson. "We just need to keep the taxpayers better informed."
White said he would prefer to reduce the amount of the tax increase and consider splitting it over two years. He said several property owners initially upset over the lack of input during the process were said to be comfortable keeping the rate the same. White said he agrees with Johnson on the commission holding a second work session, but also thinks the commission should consider allowing public comments during one of the two sessions.
"Do I think the tax increase was needed? Absolutely. Do I think I did a good job communicating that to citizens? Absolutely not," said White. "I believe the rest of the commission is committed to doing better. I know I am."
The new property tax rate of $1.65 per $100 of assessed value will increase property taxes by $147 annually or $12.25 a month on a $150,000 home. Property taxes on a $300,000 home will increase $293 annually or $24.42 a month.
The FY 2020 operating budget is $11,630,994, which includes $1.3 million in new revenue from the property tax increase. The tax increase is the first for city operations since 2008.
Collegedale projects to finish the current fiscal year with a balance of $8,171,886 in general fund reserves, with that number expected to grow to $9,604,984 by June 30, 2020.
The FY 2020 budget funds $1.34 million in capital projects, including a new roof for city hall, eight new police cars and a new dump trunk. The proposed spending plan increases the paving budget by 63% and includes a 6% raise for employees, 3% of which is retroactive to last year.