Hamilton County proposes 1% pay increase, $750 one‑time supplement and hotel‑motel tax realignment amid rising insurance and debt costs

Hamilton County Mayor’s office and finance staff on Wednesday presented the proposed fiscal year 2026 county budget and outlined priorities that include modest employee compensation increases, continued public‑safety investments and a plan to realign hotel‑motel tax allocations in light of projected shortfalls tied to the South Broad stadium tax increment financing (TIF) area.

“We faced yet another significant increase in the cost of health insurance, which we have largely absorbed within the county budget,” the mayor said, while explaining the administration’s proposal for a 1% general salary increase plus a $750 one‑time inflation supplement for full‑time county employees.

The administration said it will work with first‑responder partners (Sheriff’s Office and EMS) to allow flexibility so that departments with recruitment and retention pressures can devote the $750 supplement to pay‑plan adjustments. The county plans to absorb approximately $3.7 million in additional medical insurance costs in the proposed budget and indicated the 1% raise and $750 supplement together cost about $2.6 million.

The countywide budget picture presented in the packet lists total county government budgeted resources of about $1.095 billion, with roughly two‑thirds of that amount allocated to the school system. The administration reported that Hamilton County’s outstanding debt as of June 30, 2025, will be about $475.5 million, of which about 70% is tied to school projects.

Debt service is a large recurring cost: staff said fiscal year 2026 principal and interest payments total about $59 million (approximately $22.6 million interest and $36.5 million principal). The mayor and finance staff highlighted that significant school facility debt is an historical county commitment and not typical for many Tennessee counties.

The presentation outlined three other near‑term priorities: (1) additional funding for emergency medical services, including the opioid‑response/overdose prevention team (funded in part with opioid settlement money); (2) targeted support for volunteer fire, rescue and animal control services; and (3) continued investment in parks and public works capital projects.

Administration staff told commissioners that an internal Efficiency Task Force produced about $3.7 million in recurring and nonrecurring savings from contract revisions, purchasing changes, consolidating some services and freezing or eliminating certain vacant positions. Chief Operating Officer David Roddy summarized division‑level impacts and said the task force exercise avoided layoffs; three mailroom staff were reassigned to vacant positions rather than terminated.

On tourism and the hotel‑motel tax, the mayor proposed a multi‑year realignment and said the county should begin setting aside hotel‑motel receipts to cover a likely shortfall in the South Broad stadium TIF. Administration staff said current modeling and parcel tracking suggest modest tax increment growth to date in the TIF and advised planning for a potential combined shortfall (city + county) of roughly $1.5 million in the near term. The administration signaled it will propose a step‑down plan to rebalance hotel‑motel funding between the county and the city and intends to circulate a resolution on that topic alongside the budget.

Commissioners asked for more material and one‑on‑one briefings; the mayor’s office said staff will schedule meetings over the next 2–3 weeks and provide the Efficiency Task Force slide deck and the county five‑year capital plan on request. Commissioners also asked for more detailed road, sewer and fleet plans and for a five‑year capital outlook.

No formal budget vote was taken. The administration said there will be several commission deliberations and public comment opportunities in the weeks before final appropriation.