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Knoxville City Council passes on first reading new city budget with 50-cent property tax increase

Citing rising inflation, trouble recruiting city employees, calls for more services, and city growth—the mayor announced her budget proposes a property tax hike.

KNOXVILLE, Tenn. — Knoxville Mayor Indya Kincannon unveiled her newly proposed $546 million budget during her 2022 State of the City address, which will come with a property tax increase.

Later, on May 3, the Knoxville City Council passed the budget proposal with a 5-3 vote on the first reading, with one council member abstaining. It passed with the contingency that it would continue to be discussed in budgetary meetings before the next reading of the budget.

Kincannon said she did not want to go above the tax levels set by previous mayors and said the tax increase would be used to help address staffing issues in public utilities and in public services.

Citing rising inflation, trouble recruiting city employees, calls for more services, and city growth — the mayor announced her budget proposes a 50-cent increase in property taxes in the 2022-23 fiscal year.

An amendment to change the tax increase by 40 cents failed on May 3.

The new property tax rate would be $2.9638 per $100 of assessed value -- an increase of 50 cents from the previous year. That means a residential taxpayer whose property is assessed at $100,000 would pay approximately $10.42 more each month under the new tax rate.

Credit: City of Knoxville

Kincannon said most of that tax money would go to the General Fund to address funding gaps in core services and infrastructure, and the rest -- roughly 21 cents from the new rate --- would go to the Debt Service Fund. The city said 80% of the new revenue from the tax increase would specifically pay for core services such as fire and police, 19% would go to supplemental services such as a new litter program and offsetting inflation costs for materials, and 1% would go to pension costs increases.

"This increase restores the value of the tax rate much closer to its value of approximately ten years ago (only a net 2 cent raise when inflation is taken into account)," the budget proposal said. "In other words, when adjusted for inflation, the proposed new tax rate is actually worth only 2 cents more, in present value, than the $2.4638 rate set back in 2011."

The tax increase announcement was not without its opponents. Knoxville City Councilmember Janet Testerman said she finds it difficult to support the mayor's proposal.

"It’s really hard for me right now to think about a tax increase given the economy," she said. "I think with gas prices, I think with record inflation, it’s really hard for me to justify taking money out of people’s pockets right now, especially during this time."

The city is proposing an 8.7% increase to the General Fund operating budget from higher salaries, benefits and operating expenses, which is a nearly $22 million increase from last year. 

Kincannon also announced a $77 million capital spending plan for the 2022-23 budget year, which will include $41 million in state and federal funding to pay for infrastructure improvements. Dubbed the "Parks, Pavement and Pipes Plan," the money would be put into paying for critical infrastructure projects such as fixing roads and storm sewers.

Kincannon said her new budget will also help address issues facing the city, such as recruiting and retaining city employees by instituting a $15 minimum wage as well as setting aside more than $10 million to finance affordable housing initiatives.

$2.3 million will be set aside in the new budget to pay for new fire and police vehicles and equipment, including creating a "Real-Time Crime Center" that would help police quickly respond to crimes.

Another $5.8 million would go to public safety partners, including the Behavioral Health Urgent Care Center, Family Justice Center, McNabb Center, Young-Williams Animal Center and E-911.

City leaders held the budget address during a luncheon at the site of the Old St. Mary's Hospital in North Knoxville, which will soon be home to a Public Safety Complex that will serve as the new headquarters for the Knoxville Police and Fire departments.

The new Public Safety Complex is slated to open at the end of 2022. During her address, Kincannon celebrated several other accomplishments and additions at the old St. Mary's site, including a partnership to establish a new behavioral urgent care center in North Knoxville.

People who attended the luncheon were invited to "take home a piece of history" with one of 1,000 bricks saved from the old St. Mary's Hospital demolition.

Kincannon and others cheered successes seen in the past year, including making progress on bringing the Tennessee Smokies baseball team back to Knoxville with the approval and creation of a new mixed-used stadium.

"Knoxville is on a roll," Kincannon said. "People want to invest in Knoxville, visit Knoxville and move to our city."

The city said the full 2022-2023 budget proposal will be available on its website at 2 p.m. at this link.

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