The city of Chattanooga will rely on a proposed $30 million increase in property tax revenue for the budget year that started last month to fund employee raises.
Mayor Tim Kelly on Tuesday introduced his first budget since taking office, leaning on property taxes to address the city's labor shortage.
"I think the overarching thing here is government shouldn't be the caboose on the train of the labor market, right? I mean, we need good people, and you have to compete with the private market to get them," Kelly told the Times Free Press, noting that city pay has been an issue for years. "So that's what this does. This was kind of handed to us, it was one of the things we inherited that we had to fix, but this should fix it."
By proposing a property tax rate of $2.25 per $100 in a home's assessed value, Kelly estimates a $30 million increase in revenue.
The current tax rate is $2.27 per $100 in assessed value, but homes in Chattanooga have seen a boost in property value. By law, the county must calculate a new tax rate that would bring in the same amount of revenue despite the increase in property values. If the city used that adjusted tax rate, it would be $1.85 per $100 of assessed value.
So the proposed $2.25 tax rate is a 40-cent increase above the recalculated rate, and a slight reduction from the current rate.
For a house with a value that has increased to $175,000, the new rate would mean about $199 in additional city taxes this year, bringing the owner's city property taxes to $984 and combined city and county property taxes to $2,194, officials said.
Kelly proposes putting $10 million toward the fire department, bringing the base pay of a fire cadet up 24% from $32,524 to $40,330 and another $10 million toward police, bringing the base pay of a police cadet up 24% from $35,141 to $43,575.
Staff photo by Troy Stolt / Chattanooga Mayor Tim Kelly speaks at the beginning of the 2021 city budget presentation inside of the City Council Chambers on Tuesday, Aug. 10, 2021, in Chattanooga, Tenn.He also wants to increase the general pay plan for city employees by $10 million, including a new minimum wage of $15 per hour for city employees; pay increases ranging from 5-48%, averaging 18% per employee, with a minimum of 5% (except for those in or above the top 50th percentile, who will receive a 3% increase); and a previously announced 42% increase in starting pay for garbage, recycling and brush pickup drivers.
With the increase going toward pay, Chattanooga's police budget now accounts for about $80 million of the city's $302 million budget, or 24%, up from $69 million approved last year.
Last summer, protesters took to the streets of Chattanooga to call for defunding or divesting from the police department in response to the police killing of George Floyd, a Black man in Minneapolis.
Hundreds of protesters also organized to inundate the city council with calls for defunding the police during budget sessions, dragging a virtual public hearing into the wee hours of the morning.
While Kelly is increasing the police budget, he proposes cutting 25 historically unfilled uniformed officer positions because he believes the money would be best utilized to attract, retain and train better officers.
"A lot of the problems and concerns we have around brutality is because you've got young, untrained officers and you're not keeping or able to attract the best officers," Kelly said.
Kelly is also budgeting $1.2 million for 11 alternative response positions under public health, which will account for 10 certified social workers to respond to certain police calls and a supervisor for the team.
"I think, again, what we're committed to is smarter policing, community policing and policing that isn't exploitative and addressing the issues that protesters had last summer," Kelly said Tuesday, noting that the inspiration for his model comes from a Eugene, Oregon, program that uses similar alternative ways to respond to emergency calls.
During his campaign, Kelly told the Times Free Press that he would not arbitrarily increase or decrease any department's budget but would find police reform measures that weren't "disruptive or punitive."
In total, the city is using 53 positions that were either vacant or restructured, freeing up about $1.2 million.
"No one is losing their job," Chief of Staff Brent Goldberg said. "But even though we've added some positions with reorganization, we've also cut positions that are no longer needed or related to some of those programs that are being eliminated."
New priorities were also funded with $4 million saved with miscellaneous changes to inefficiencies or redundancies that Kelly said his administration found since taking office.
"Most of the cuts are just in areas where we feel like there were wasted or duplicated efforts," Kelly said, citing unused software licenses as an example. "I mean, you know, we talked about a bunch of Microsoft contracts, and that stuff is obvious, right? I mean just stuff that was very clearly waste."
Another $500,000 is being cut from former Youth and Family Development programs and being reallocated to the Department of Early Learning, as Kelly dissolved YFD.
Many of the city's remaining savings are being put toward the paving budget, which will go from about $6 million to $10 million, on top of the $40 million in capital funds Kelly plans to put toward roads over his four years.
"Also, we're going to pave smarter," Goldberg said, adding that that the city will create a four-year paving plan that optimizes crews and resources. "One of the big issues from the past several years is 30% of our paving budget, roughly, has gone toward mobilization costs. So, because we're paving a road there, and a road there, and the road there, those crews have to move all over town."
The budget also allocates money toward new education programs, fighting homelessness in the city and other projects, which Kelly said allows him to at least "dip a toe" in each of his campaign promises during his first budget.
Over the next two weeks, the city council will do its annual budget education sessions before a public hearing on the proposed budget from 3-5 p.m. on Aug. 31.
The council will then vote on the budget at its Sept. 7 and 14 meetings.
Contact Sarah Grace Taylor at 423-757-6416 or staylor@timesfreepress.com. Follow her on Twitter @_SarahGTaylor.