Collegedale government officials remain divided over the city’s decision to increase its property tax rate by 12% this year. For the last two years, the city’s rate stood at 1.3897 per $100 of a property’s assessed value. When three of Collegedale’s five commissioners passed the city’s budget during a tense commission meeting in the spring, the rate increased to 1.55. Besides Collegedale, only two other cities located in Hamilton County — Red Bank and Lookout Mountain — raised their rates this year. Hamilton County’s other seven municipalities kept their rates the same, according to numbers available on the state comptroller’s website.
The Accent contacted city and county officials to investigate how property tax rates are determined and why city leadership decided to raise the rate despite concerns from certain commissioners and residents. The newspaper also interviewed Collegedale residents about their views regarding the increase.
Tax Rate History
According to information on Hamilton County’s website, the county assessor determines a property’s value, and that assessed value helps determine how much property owners must pay in taxes. However, county and city legislative bodies determine tax rates.
Tennessee law requires that county and city property tax rates should decrease when property values increase so as not to yield additional revenues for municipalities. This Tennessee Certified Tax Rate process, created for “truth-in-taxation,” is explained on the Tennessee comptroller’s website.
Hamilton County property reappraisals occur every four years. In 2021, property values in Collegedale were 26.5% higher than their values in 2017, according to County Assessor Marty Haynes. In accordance with state law, the county property tax rate decreased from 2.7652 in 2020 to 2.2373 in 2021, and Collegedale’s property tax rate decreased from 1.65 to 1.3897.
In the past decade, Collegedale has raised its rate only once.
Why Increase Now?
At a June 5 commission meeting and while speaking to News Channel 9, Collegedale Mayor Morty Lloyd explained that the city needed to increase its property tax rate to combat the effects of inflation while maintaining its quality services.
In an email to the Accent, City Manager Wayon Hines wrote: “Inflation affects the city balance sheet like it does individuals. The asphalt costs more; the police cars cost more; [there is] wage pressure, etc. The city works to obtain the most value from every project or purchase we can, but inflation is a factor.”
As reported in a previous Accent article, Collegedale and unincorporated Ooltewah have experienced the fastest growth countywide. Hines said city expenses have also increased due to that development. For example, the city needs more Public Works employees to collect garbage as it gains more residents.
Collegedale’s operating budget for the 23/24 fiscal year (FY) sets total expenditures at $13,430,300, an increase of $155,481 from the 22/23 FY operating budget’s projected expenditures. The city’s projected revenue from property taxes this FY is $6,367,000, a 15% increase from the previous budget’s projection for property tax revenue acquired during the last FY. Total revenue, however, is only projected to increase by 1%. Both budgets are available on the city’s website.
Collegedale is often ranked within the top ten safest cities in Tennessee and offers an array of high-quality services to its residents, according to Hines. Some of the services he listed include the city’s roadway network, greenway system, the Tri-Community Volunteer Fire Department, library and Parks and Recreation events.
“We are becoming known for the public amenities we provide for the community,” he wrote.
Brigett Raper, communications strategist for the Small Cities Coalition of Hamilton County and a Collegedale employee, explained in an email to the Accent how the state’s recent removal of the Hall income tax and refusal to share more of its sales tax with municipalities also affected Collegedale’s decision.
“Inflation affects the city balance sheet like it does individuals.”
The Hall income tax, enacted in 1929, applied to income derived from stocks and bonds, and revenue from the tax was shared with the government of the municipality where the taxpayer resided, Raper explained. In 2016, state legislators began phasing out the tax; it was officially repealed for tax periods beginning in 2021 or later, according to the state government’s website.
“Tennessee now joins just seven other states that impose no individual income tax,” Raper wrote. “ … As a result of the phase-out of the tax, most municipalities had no choice but to increase property taxes to make up for the lost revenue.”
Earlier this year, Collegedale commissioners and other city leaders in Tennessee lobbied in Nashville as part of a Tennessee Municipal League initiative, asking state representatives to share a portion of its sales tax with cities. Raper explained that in 2002, the state government, in order to avoid a budget crisis, increased its state sales tax rate from 6% to 7% but altered its historic sharing relationship with cities to retain revenues derived from the increase.
“The combined effect of these two measures has been to allow nearly $2 billion in sales tax revenues to accrue entirely to the benefit of the state’s general fund at the expense of municipalities and municipal taxpayers,” Raper wrote.
State legislators denied city leaders’ request for the state to once again share portions of its sales tax because they had concerns about approving new measures that would result in recurring expenses for the state, according to Raper.
“While the State of Tennessee is enjoying record amounts of income (contributed by the cities) and [has] a rainy-day fund of over $2 billion, our legislators still believe that difficult economic times are ahead,” Raper wrote.
In the Minority
When asked why Collegedale was one of only three cities in the county to raise its tax rate, Hines wrote: “Different cities have different situations to address. Sometimes they cut services. Some cities have an increase in sales tax adequate to offset the inflation. It would take a comparison of each city to understand why … they [did or did not] raise taxes.”
According to Raper, Soddy Daisy and Lakesite needed to increase property taxes but did not receive approval from their commissioners.
Through email communication facilitated by Raper, Lakesite’s city manager, Kirsten Ert Acuff, told the Accent that the city has never increased its property tax rates since its founding 50 years ago.
“Rather, an increase in the number of homes and gradual increases in home values have produced increased revenues in the early years after the city was founded,” she wrote. “ … At this time, we are able to maintain the same level of services as in prior years without an increase in property taxes.”
According to the state comptroller’s website, property taxes are the largest single source of funding for local governments. Lakesite, however, is not highly dependent on its property tax revenue, instead using local and state sales tax revenue to fund its operations, Ert Acuff wrote.
“As most of our services are contracted out, we are not immune to price increases, so we do not rule out that adjustments might have to be made in the future to cover expenses for critical city services,” Ert Acuff wrote.
Raper told the Accent she believes Collegedale needed to increase its property tax rate by 12% “to continue supporting the growth of Collegedale and provide the level of services its citizens have come to expect.”
Lloyd, who was elected to the commission in December 2022, along with Commissioners Debbie Baker and Katie Lamb voted to approve the budget at the June 5 commission meeting. Commissioner Tonya Sadler voted against it, and Vice Mayor Tim Johnson abstained from voting. During the meeting, each commissioner expressed that the city’s decision to increase its property tax rate was not one the leaders took lightly.
A Chattanoogan article described City Hall on June 5 as “filled with residents concerned about the increase,” and tensions between city leaders were high during their discussion of the budget. A live recording of the meeting can be viewed on the city’s YouTube channel.
“We go over these numbers and everything and scrutinize them,” Baker said at the meeting. “We look to see … what can we do, and, at the same time, we look to see how we can enhance your life as we go through the year, how we can take pressure off of you and everyone else in the community. And we have to go with the whole community, so we’re trying just to be flexible … and be fair to everybody.”
Lamb said she and her husband are living on a retired income, so they must watch their budget closely. However, she added, the rate increase will cost them less than what a decrease in city services would cost them.
Lloyd said he doesn’t want the city to compromise its identity, and he appreciated the time administration put into creating the budget.
Johnson said: “I honestly feel like we are elected by the citizens of Collegedale to make good choices, the best choices we can for the city and for them, and I feel like normally we do a pretty good job of that. But this is the one budget that I have now come to [feel uncomfortable with] after receiving probably 11 calls or conversations while I’m out at the grocery store or something over the weekend.”
Johnson attempted to find ways to alter the budget to keep the property tax rate stagnant during the meeting. However, his suggestions did not account for what the city needed to meet its proposed budget, Hines told him.
The Accent attempted to contact Johnson multiple times by phone and email to determine his current stance on the city budget but did not receive a response.
At the meeting, Sadler expressed dissatisfaction with the budget and rate increase, and Johnson stepped in when she and Hines began addressing one another directly, asking the leaders to maintain a professional conversation.
“The combined effect of these two measures has been to allow nearly $2 billion in sales tax revenues to accrue entirely to the benefit of the state’s general fund at the expense of municipal taxpayers.”
“Unfortunately, there’s a little finger pointing both ways,” he said, referring to the two commissioners’ behavior.
Sadler is still dissatisfied.
“I felt then, and I still feel now that [the rate increase] was unnecessary,” she wrote in an email to the Accent. “I feel that Mayor Lloyd was convinced by the city administration, who obviously didn’t take any steps to control city spending, that the tax increase was the only way forward.”
In response to her comment, Hines wrote to the Accent: “I am disappointed she feels that way. The commissioners were given multiple opportunities to give feedback on the budget. We did not attempt to pressure any of the commission. Staff was tasked with providing a balanced budget that maintained or increased services during a time of year-over-year incredible wage pressure and inflation.”
Debbi Ahlden, who has lived in Collegedale for eight years, was one of multiple residents who expressed concerns about the rate increase at spring commission meetings.
In a message to the Accent, Ahlden wrote that older sections of the city house several senior citizens on fixed incomes, and she believes that raising taxes will “price them out of their homes.”
“The geographic area of Collegedale is very small,” she wrote. “However, it seems to me that the city wants to be a Lookout Mountain or a Signal Mountain type of community. The city is very fortunate to have benefactors like McKee Foods and the Collegedale Tomorrow Foundation, Inc., that continue to develop and support projects that the city would not be able to afford on [its] own. The problem with some projects is that, when completed, the price of maintaining said projects reverts to taxpayers of Collegedale.”
John Beckett, a Collegedale resident who told the Accent he has owned property in the city since 1975, wrote in an email to the Accent he believes residents get a good deal from city services for the tax dollars they pay.
“If I were running for a commissioner slot, I might think of looking for ways to increase taxes a small amount each year rather than hitting homeowners with a ‘speed bump’ after several years without a change,” he stated.
“What we’re paying is reasonable — considering all the things the Collegedale government has done to make this a better place,” he added. “We have excellent police and fire protection, recreational facilities for all ages, and regular garbage service is even included.”
Jeff Cuthbertson, president and CEO of SERVPRO Team Cuthbertson, a damage restoration company, wrote in an email to the Accent that an advantage of his company’s headquarters being situated in Collegedale is the city’s business-friendly tax climate.
“While recognizing that tax adjustments are sometimes necessary, we respectfully urge our elected officials to minimize such increases,” he stated, “ensuring that Collegedale remains appealing to small business owners and retains its competitive edge.”