For the first time in a decade, the city of East Ridge is raising property taxes.
Council members voted 3-2 Thursday night to set the city's tax rate at $1.25 per $100 of a home's assessed value.
That's a reduction from the current tax rate of $1.34 per $100 of assessed value. But the law requires local governments to adjust that rate downward when property values are on the rise, so that the city doesn't gain more tax revenue from the rising value of property.
To set the rate so that the city would gain no additional revenue from rising property values, the city would charge a rate of $0.9929 per $100 of assessed value. The $1.25 is an increase from that amount, known as the certified rate.
Council members Esther Helton and Jacky Cagle voted no.
With the increase, the owner of a $175,000 home will pay about $112 more a year than they would have paid if the city kept the certified rate.
City Manager Chris Dorsey said the rate increase will bring in the additional $1.1 million required to fund the needs of East Ridge.
Around $600,000 of that is earmarked for employee raises, which Dorsey said are necessary for the city's pay to be competitive with that of nearby cities and counties.
"Some people may get a larger adjustment than others," he said. "Some people might not get any adjustment because they're already competitive."
East Ridge isn't the only local municipality raising taxes to cover employee raises. Chattanooga, Signal Mountain and Red Bank all raised taxes, in part to offer fair and competitive pay for employees, particularly in their police and fire departments.
Other expenditures covered by the East Ridge tax rate increase include $125,000 to add two police officers, which is a significant decrease from the six officers requested by the police department; $170,000 to switch to Hamilton County ambulance service; and $200,000 for paving, Dorsey said.
While the city has avoided raising taxes in the past 10 years, he said the city's been putting off a lot of expenses to do so.
For example, the police department is short 15 vehicles because it has no vehicle replacement program. The city plans to use COVID-19 relief funds to purchase seven vehicles this year, he said.
Resident Robert Gilreath said the tax increase will be difficult for the 26% of East Ridge's 21,000 citizens who are seniors or disabled and therefore live on fixed incomes.
Kay Vickery, who's lived in East Ridge 45 years, asked the council to consider holding off on raising taxes to see if revenue brought in by new developments such as the Red Wolves stadium complex and the new Food City would be enough to cover the city's needs without burdening citizens with higher property taxes.
In 2012, about half the city's revenue came from property taxes. In the FY2022 budget, property taxes account for only around 34% of revenue in the operating budget, Dorsey said.
"So we have been utilizing other revenues to help cover the costs and the increased expenditures, but ... we are at that point where we have to be looking at additional revenue," Dorsey said.
Contact Emily Crisman at email@example.com or 423-757-6508.