Bills

Chattanooga property tax rate may drop, but bills are expected to increase

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If Chattanooga Mayor Andy Berke has his way, the city will knock 3 cents off the property tax rate it has had on the books for seven years.

However, since Chattanooga property values have increased by an average of 10.9 percent after the recent Hamilton County reappraisal, plenty of  property owners can expect to pay larger tax bills in the near future.

This evening, the city’s top financial officers presented the fiscal 2018 budget proposal — which includes the property tax rate —to the Chattanooga City Council.

“This budget represents a lot of hard work, long hours and difficult discussions,” Maura Sullivan, chief operating officer, said.

The 2018 operations budget calls for $253 million in revenue to meet its expenses, compared to the 2017 operating budget of $230 million. 

About $16.4 million of the $23 million increase over last years budget has to be put toward mandatory services, Sullivan said.

City Finance Officer Daisy Madison said the city faces a number of challenges, including increases to police and fire pensions, general pensions, post-employment benefits and medical costs.

Berke recently addressed Chattanooga’s challenge to meet recommended funding levels for its retirement plans by 2020. A recent assessment of the city’s police and firefighter pension plans, completed in January 2016, indicated the city was about $150 million short of the money it needs to pay for future obligations.

On top of additional costs, the city also faces drops in revenue streams, Sullivan said, citing a 1 percent cut to sales tax on food and the phase out of the Hall income tax. For fiscal 2018, Chattanooga will lose $1.2 million in Hall tax revenues. 

The city does have the choice of rolling back its certified tax rate to ensure it would maintain the same overall level of revenues, although individual tax bills could still vary somewhat compared to last year. The state recommended dropping the existing rate of $2.3090 per $100 of assessed value down to $2.0573 per $100 of assessed value to keep the revenue total the same. The city is going with $2.277.

Madison said that if a home’s value did not increase after the reappraisal, the owner would actually owe less in city taxes than they did last year.

If a Chattanooga home previously appraised at $100,000, but its value increased to $110,000 after the recent reappraisal, the owner will pay $49 more in city property taxes. Multiply the assessed value, which is 25 percent of the appraised value, times the tax rate to get the tax bill total: $577 for the $100,000 home value; $626 for the $110,000 home value.

Should the Chattanooga City Council actually votes to roll the property tax rate back to $2.0573, the city tax bill would actually be $566 for the $110,000 home —about a $60 difference compared to what is proposed. 

“We have seen that our investments are leading to progress in our City with the lowest unemployment rate in years,” Berke said in an emailed statement after the presentation. “This budget makes key investments in safety, families, neighborhoods, and our economy, which will continue to move Chattanooga forward.”

Earlier in the day, Berke announced he would push for a the city to adopt the state’s senior tax freeze program, which caps the amount of property tax qualifying seniors pay on their homes if their annual income does not exceed $38,720. The program does not reduce the amount of taxes program participants currently pay.

“The goal is to make sure that more seniors can stay in their homes and make sure that more people can live the life that they want here in our city,” Berke said to a crowd of seniors at the Eastgate Senior Center.

Councilwoman Carol Berz, who attended the event, said she expected the council would support the measure.

“This is a wonderful move that the city is making,” Berz said. “The city council is behind this and it is something that should have happened a long time ago.”

The city council is scheduled to vote on the 2018 budget proposal on Sept. 5.

Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow him on Twitter @pleach_tfp.

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