The town of Signal Mountain and the city of Red Bank are raising property taxes, which both municipalities rely on for most of their revenue.
Both plan to use part of the increased property tax revenue to cover the cost of increasing pay for at least a portion of staff.
Signal Mountain plans to raise its certified tax rate by 6 cents, or about 4%, going from $1.6412 to $1.7102 per $100 of a property's assessed value.
The town would have needed to raise the certified rate by 10 cents to cover the cost of staff pay increases recommended by the town's personnel committee based on a recent salary study. The 6-cent increase was a compromise reached by the council that will result in a slightly lower increase in pay for staff.
Councilman Andrew Gardner was the only council member who did not vote for the increase.
He said he continues to hear from citizens who say they are disappointed with what they see as fiscally irresponsible decision-making by the council in moving so quickly to implement staff pay increases in response to the results of a salary study presented just before the council was set to vote on a balanced budget that did not include the pay increases.
"We need to step back, take a year to plan and bite off chunks we can chew from a budgetary standpoint," said Gardner, the only councilor who voted no on the budget ordinance. "I haven't heard from a single citizen that we shouldn't be paying our employees right or that they aren't doing a great job. We know that, but we need to live within our means."
To cover the cost of implementing the pay increases, the council is pulling funds from its reserve in addition to raising property taxes. The tax increase is not sufficient to continue to pay the increased salaries in the future, which means the town will need to further increase taxes in the coming years to sustain the increased pay.
Councilwoman Susannah Murdock said many town citizens feel that people who live on Walden's Ridge outside the town of Signal Mountain get the benefits of services provided by the town without paying Signal Mountain taxes. She said part of the council's plan going forward is to engage in discussions with leaders of the town of Walden and unincorporated areas.
Two residents spoke in favor of raising property taxes, and one spoke against the increase.
"I don't mind you raising my taxes; they're very well spent, I think," Signal Mountain resident Anne Hagood told the council, adding that she hopes councilors will raise taxes enough to cover services going forward.
Red Bank city commissioners voted unanimously to raise their city's certified tax rate by 20%, from $0.99 to $1.10 per $100 of a property's assessed value.
Interim City Manager and Finance Director John Alexander recommended the city raise the tax rate to $1.20 in order to build up the city's general fund.
He said the purchasing power of the revenue from local and state sales taxes, the city's other two sources of income aside from property taxes, has basically stayed the same over the past decade other than keeping up with inflation.
The revenue from the property tax increase would be enough to build up the city's general fund and prevent the need for another tax increase until the next property reassessments in four years, Alexander said.
Commissioner Pete Phillips proposed the $1.10 tax rate, which Alexander said would cover expenses for the next couple of years.
In response to a question from Mayor Hollie Berry, Alexander said the smaller increase also would cover raises for the city's firefighters that had been previously discussed.
A number of citizens spoke for and against the tax increase.
Resident David Hafley pointed out that the FY 2021-2022 budget that already had been passed did not indicate the need for a tax increase, and several citizens questioned the need to raise taxes without identifying specific uses for the additional revenue.
The second reading of Red Bank's tax rate ordinance will be at the commission's Aug. 17 meeting at 6 p.m. at city hall.
Contact Emily Crisman at ecrisman@timesfreepress.com or 423-757-6508.