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.
Commissioners pass resolution to improve future budget discussions
Future discussions surrounding the City of Collegedale’s budget and tax rate might look different with the passing of a new ordinance prompted by budget discussions earlier this year. At the May 15 and June 5 meetings, Commissioners Tonya Sadler and Vice Mayor Tim Johnson expressed concerns about how the budget was communicated. On the latter date, Sadler asked her fellow commissioners why they were even discussing the budget if, at that time, city administrators would be unable to properly advertise potential changes to the public should the commissioners vote against it.
According to City Manager Wayon Hines, some commissioners complimented administrators’ detailed work and timeliness in communicating the budget, while two others said they would prefer to have more discussion surrounding the budget in the future. Concerns led commissioners to pass Resolution 536, which requires that a public hearing be held before or at the time of the first reading of the budget, according to Sadler.
“Commissioners will have more time to deliberate the sentiments of citizen feedback,” she wrote in an email to the Accent about the ordinance. “There will also be two budget workshops instead of one.
“Collegedale citizens will hear more discussion than they ever have about budgetary expenses in the fiscal year 23/24 workshops,” Sadler stated. “With three of the five commission seats up for election in November ‘24, incumbents will be more engaged as they campaign to keep their seats.”
According to Hines, the city’s property tax rate will likely be decreased after the next property reappraisal in 2025.
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.
(Photo courtesy of Jamie Heath)
“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.”
Commissioners’ Stances
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.
Revisiting controversial budget items
Three budget items discussed at length during the June 5 commission meeting by Collegedale commissioners and residents were: increased retention incentives for city employees, the addition of a new position in the Public Works Department and the purchase of six police vehicles.
Retention Incentives
According to City Manager Wayon Hines, Collegedale’s pay plan does not allow for employee raises based on years of service or merit, so city administration wanted to increase the budget’s retention incentives this year to recognize employees with extensive experience in their roles.
“One item that we continue to receive feedback from employees that have a longer tenure is that the experience should pay more than a fresh hire,” Hines wrote in an email to the Accent. “They are correct.”
Commissioner Tonya Sadler disagrees. She recently shared a handout with the Accent that she created and distributed to her fellow commissioners in January. In it, she wrote that the city’s proposed increase of employee retention pay favors upper management employees “who already earn considerably higher salaries.” Thus, she believes a retention pay plan based on years of service is inappropriate.
“An annual retention bonus should be designed to show that all our employees’ continued years of service are appreciated equally as the equal human beings they are,” she wrote in the handout. “A scaled retention incentive gives the impression that we care more if a manager sticks around than if a police officer or auto technician leaves.”
Sadler provided the Accent with two additional documents: a city report listing the retention incentives paid to city employees last year and a budgeted pay spreadsheet listing retention incentives to be paid to employees this year. According to those documents, this year’s retention pay for some management positions will increase by about $4,000 compared to the retention pay those positions received last year. Commissioners approved $8,689.80 as the maximum retention pay a single employee may receive, she wrote. According to the spreadsheet she shared, positions to receive that maximum amount are city manager/engineer, assistant city manager/chief financial officer and chief of police.
Before this year, total retention incentives for all city employees cost about $91,000, according to Hines. This year, the cost is about $175,000. Hines stated that Collegedale’s total salary increases are in line with or less than salary increases enacted by other municipalities in Hamilton County. Retention incentives have not yet been paid out this year, he added.
Brigett Raper, communications strategist for the Small Cities Coalition of Hamilton County and a Collegedale employee, wrote in an email to the Accent that she and other employees are grateful for the raised incentives.
“The measures Collegedale’s administration has put in place in an effort to keep quality employees are greatly appreciated by all,” Raper wrote. “As a result, each department goes beyond what is required on a daily basis to help make the city run smoothly.”
According to the documents provided by Sadler, Raper’s retention pay was $1,810.85 last year, and she will receive $4,282.20 this year.
Debbi Ahlden, a Collegedale resident who expressed concerns about the retention incentives at a spring commission meeting, informed the Accent that she continues to disagree with the city’s method for determining retention pay.
“The retention bonus formula that the city uses calculates extremely high payouts for some employees. Other government agencies have this type of bonus but with different formulas,” she wrote. “Making changes to this needs to be explored by the commissioners because the city employees making the most in bonuses are the ones receiving the most.”
Public Works Position
At the June 5 commission meeting, Vice Mayor Tim Johnson expressed confusion concerning the proposed budget’s addition of a new safety position in the Public Works Department. Commissioner Katie Lamb asked Hines why the city had never hired anyone to oversee the position’s responsibilities before. Hines explained that the department did not have good standard operating procedures and needed a full-time employee to draft some and help maintain safety regulations.
According to Eric Sines, director of Public Works, the new position, titled “safety director,” was filled in July by Lamar Rains. The position was a necessary addition to the budget to help Public Works maintain a “safety-first culture” and remain up-to-date with training and regulations, Sines wrote in an email to the Accent.
“From a financial standpoint, just one or two small injuries prevented would pay for the annual salary,” Sines wrote. “A major injury would cover several years. There is also the psychological side of living with a lifelong injury or a fatality of a coworker or yourself. All in all, this position is needed based on the amount of employees, the type of work that we do [and] the very many different jobs we do on a daily/weekly/monthly basis.”
Police Vehicles
The Accent contacted Hines and Collegedale Assistant Chief of Police Jamie Heath about the city’s planned purchase of six police vehicles.
Collegedale tries to purchase five police cars on an annual basis but was only able to purchase four last year, which is why the city plans to acquire six this year, according to Hines.
“They will be an asset,” he wrote. “The city needs its vehicles, whether they are police cars or garbage trucks, to be in good mechanical condition and safe working order to serve their purpose.”
Heath wrote in an email to the Accent that the department expects to receive the vehicles at the end of the month. He added that the cars are not considered an added expense but rather a routine expense, and, after a lifespan of five to six years, the department’s vehicles and accompanying equipment are sold at an auction, with proceeds going back to the city’s budget.
“An officer spends 90% of their duty day inside their vehicle. It’s their workspace, their office,” he stated. “The durable four-wheel drive Durangos that our agency has been working to transition over to have proven invaluable, especially during periods of inclement weather or rescue operations during natural disasters.”
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.”
(Photo courtesy of source)
Resident Voices
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.”
(Photo sourced from city website)
