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Knoxville council adopts $2025–26 budget after debate over taxes, debt and housing
Summary
The City Council approved the fiscal 2025–26 annual appropriations after discussion about debt payments, affordable housing funding and whether a proposed half‑cent sales tax should affect this year's budget.
The Knoxville City Council approved the city’s annual appropriations ordinance for fiscal 2025–26 on a 7–1 vote following extended debate about revenue projections, use of restricted debt funds and affordable housing priorities.
Council members and city finance staff said the adopted budget does not assume the mayor’s recently announced half‑cent local option sales tax; the proposed local option would be a separate decision for council and, if approved for the ballot, for voters. The council’s approval allows the city to operate from July 1, 2025, to June 30, 2026.
The budget discussion centered on three revenue and spending items: a $25 million pre‑existing fund set aside for convention center debt service, the split of affordable‑housing investments within a total $8.2 million housing package and ongoing personnel costs. Director Evans told the council the $25 million was restricted for the convention center and that using it to pay down that debt will reduce annual carrying costs by roughly $4.1 million over the life of the bonds.
Council member Parker pressed for more clarity on long‑term staffing and debt projections and asked how the budget would change if the proposed sales tax were adopted. City leaders responded that the budget was prepared using ordinary revenue forecasts and that it does not count on the proposed sales tax because its approval and implementation remain uncertain.
Several council members highlighted specific investments in the adopted budget, including: $8.2 million for affordable housing (broken out by staff as funds for transforming Western, a $2.5 million affordable rental fund and $1.5 million for permanent supportive housing), $300,000 matched by Knox County for day services and shelter beds, increased support for warming centers and $1.99 million for community agency grants. The mayor and Vice Mayor Smith said the capital needs not funded in this budget total about $70 million in unmet infrastructure requests, which the administration plans to address in further discussions.
Council members also raised concerns about the scale and distribution of housing funds. Parker noted a 26% decrease in the affordable housing trust fund line from the previous budget and urged additional attention to homelessness prevention and legal aid funding. Several council members said they would continue to monitor programs and consider budget amendments during the year.
The motion to approve the appropriation ordinance passed 7–1. The approved ordinance sets property tax levies and authorizes reappropriation of nonproject encumbrances into the 2025–26 fiscal year.
City officials said more detailed budget worksheets and the capital plan will remain available to council and the public for follow‑up questions.
