Call to Order (1:05)
- Budget Chair Councilwoman Raquetta Dotley opened session.
- Administration: Kevin Muhanna (CFO/Finance) and Hanukkah Myers (Housing & Finance Team) presented.
1. Reappraisal Analysis – Presentation by Myers (1:18–59:00)
- Historic Increase: Citywide property wealth grew $14B (2021–2025), from $24.5B → $38.5B.
- Assessed Value: Up 49%, now $10.7B taxable base.
- Districts: Greatest % increases in Districts 9, 2, 5.
- Drivers: Strong demand, new multifamily/townhome construction, flips of older housing, gentrification of historically undervalued areas.
- Owner vs. Non-Owner Occupied: ~45% owner, 55% renter-occupied; renters indirectly pay via rent.
- Revenue Sources: Property tax funds over 50% of city budget; Tennessee law prevents automatic “growth capture” (Truth in Taxation requires rollback to certified rate).
2. Certified vs. Adopted Tax Rate (59:00–1:20:00)
- 2024 rate: 2.25% → $162M revenue.
- Certified 2025 rate: 1.55% → $167M (flat + $5M from new development).
- Holding at 2.25%: Would yield $242M (extra $80M).
- Debate: Council may adopt any rate (higher/lower than certified). State attempted (but failed) to cap increases.
- Council clarified: no state cap currently; certified rate ensures same total revenue citywide, but some households’ taxes rise while others fall depending on local growth.
3. Impact on Households (1:20:00–1:10:00)
- Even at 1.55%, average household taxes rise due to residential values climbing faster than commercial.
- Average monthly increase: +$13–$54 per household depending on scenario.
- Owner-occupied homes: Avg increase $161–$800 annually; programs exist for low-income seniors.
- Non-owner (rentals): Avg increase $146–$533 annually, concentrated in single-family rentals.
- Renters indirectly affected, though many landlords already raise rents 2% yearly to offset costs.
4. Council Discussion – Key Points (throughout Q&A)
- Equity concerns:
- Councilman Clark – burden may fall disproportionately on districts with fastest appreciation (5 & 9).
- Councilwoman Hill – District 2 residents already carry highest dollar tax load; service quality must match.
- Councilwoman Burrs – asked for comparisons of property value increases vs. household incomes.
- Historical undervaluation: Burrs requested analysis of gerrymandered/undervalued neighborhoods (2006–2026).
- Services & Accountability:
- Hill & Clark pressed administration: if taxes rise, how will service quality improve?
- Administration (Muhanna) – agreed quality uneven; pointed to new metrics, dashboards, and 311 system overhaul in progress.
- County Role: Council criticized County Commission for adopting certified rate (1.51%) while shifting costs to city (esp. schools). Members asked for data on county vs. city service funding.
- First Responder Pay Target: $23M total needed; $5M already in budget; $17.5M gap remains. Funds would be earmarked strictly for police/fire sworn pay.
5. Next Steps (1:40:00–end)
- Budget Education Sessions: July 22 & July 29 (police/fire pay focus).
- Council alignment session: Week of July 29.
- Public Hearing: Aug 26.
- Amendment Vote: First Reading Aug 26, Second Reading Sept 6.
- Options on table: certified rate (1.55%), full growth capture (2.25%), or in-between.
