KINGSPORT, Tenn. (WJHL) – Kingsport Mayor and Aldermen’s Council got a first look at the following year’s budget this week and came away resigned to a likely increase in property tax – most likely 12 cents, which would bring the rate at $1.99 per $100 of assessed value.
City Manager Chris McCartt told News Channel 11 that while the city’s economy is growing, costs are going up more.
“Any revenue growth we’ve seen, and it’s substantial, has been eaten away by inflation,” McCartt said.
Under normal circumstances, this strong growth could have allowed the city budget to absorb the increased costs for things like gas and materials. But McCartt said Kingsport was also trying to close a long-standing pay gap that left its employees “at the tail end of the market” when it came to compensation.
Closing that gap in an unprecedented job market cannot be done without more income, he said. McCartt just returned from a statewide human resources meeting, where he learned that some central Tennessee local governments were adjusting their compensation plans up 10-16%.
“The Northeast Tennessee delegation was in the single-digit area, all over the map, and then the central Tennessee area was 10-16%. Smaller towns than Kingsport are considering this type of jump.
Kingsport has averaged an employee vacancy rate of 6% over the past two years, compared to an historical norm of around 1%. The balanced budget presented by McCartt funds a cost of living adjustment of 2% and a step increase for an average increase of approximately 4.5%.
He said the situation was unlikely to reverse.
“The reality is that if we don’t make a substantial leap…from a service perspective within our city, which is our people, we’re a service-based industry, we’re going to hit critical failures at some point. in this next fiscal year because we don’t have organizations – and we won’t have organizations because we won’t be competitive.”
McCartt is obligated to present a balanced budget each year when the BMA begins its budget process. He said it was the first time as city manager that he had felt genuinely uncomfortable with the city’s ability to deliver what it should to taxpayers without increased revenue. The city’s last property tax increase of 13 cents was in 2013.
“It’s very difficult to walk into a conference room knowing that you have a balanced budget, which I’m responsible for doing, but also realizing that there are gaps in that budget that are of concern,” he said. said McCartt.
He said BMA members took the news head on, asking staff to come back to his next workshop with scenarios of increases of 12 cents, 15 cents and 19 cents above the current rate of 1 $.87. A penny off the property tax rate brings in about $200,000 a year.
The BMA has grappled with budget changes and rising costs in this financial year, which ends June 30, as inflation really took hold.
“We explained, inflation is the cause behind it,” McCartt said. “We recently had to shift several hundred thousand dollars in our fleet budget just to meet fuel costs.”
He said he realizes taxpayers won’t be thrilled if property tax rates go up 6.4%, which would be a 12-cent increase. That’s roughly in line with the rate of inflation or a bit lower, though.
“We’re always looking for ways to not have to come to the board with a request, whether through fees or taxes,” McCartt said.
“I think the same thing that a lot of people are seeing looking at their day to day in terms of increased spending, well, your city is seeing those same things, and so that we can continue to provide basic services as well as many of those amenities that make Kingsport unique, we need to stay competitive.