Red Bank faces roughly $762,000 shortfall after assessor office miscalculation of certified tax rate

Red Bank city officials said at a special called meeting that a human error in the Hamilton County Assessor of Property’s office produced an incorrect certified tax rate, leaving the city with a projected property-tax revenue shortfall for the fiscal year.

City Manager Martin Granholm and Chief Financial Officer Chris Pickle presented the technical calculations and documents that led to the finding, and Hamilton County Assessor Marty Haynes told the commission he accepts responsibility for the mistake. “When we make a mistake, I have to take full credit for it,” Haynes said. “This is a mistake. Unfortunately, it's human error.”

The error stemmed from the prior-year adjusted tax levy calculation: the assessor’s staff entered an older prior-year tax rate (a $1.39 figure) instead of the correct prior tax rate of $1.67 when preparing the certified tax-rate calculation form that the State Board of Equalization mailed to Red Bank on June 20. That incorrect input produced a certified tax rate of 0.8968 on the signed calculation form. Granholm said the corrected revenue-neutral certified tax rate should have been $1.0775.

Why it matters: the city’s calculations show the arithmetic error produced a theoretical revenue difference of about $914,603 between the incorrect and corrected revenue-neutral tax rates, but because the commission had already planned a roughly 9% increase during budget deliberations the practical impact to collections this year is an estimated $762,286 shortfall. Pickle and Granholm walked commissioners through the assessor’s pages showing the total tax base figures and the line that produced the prior-year adjusted levy of $5,453,933.81 versus the erroneously entered $4,539,501.80.

Haynes and county staff told the commission that once tax bills are mailed under state law the published tax rate for that year cannot be retroactively changed for that tax year. Haynes said there are statutory procedures for revising a tax levy when errors are discovered; the assessor cited Tennessee law and the State Board of Equalization’s role in accepting recalculations. In the meeting a statute was cited for the record as the basis for correcting an erroneous calculation and for how a revised rate could take effect, including when corrections occur after tax billing.

Commissioners asked about checks and balances and why the mistake affected Red Bank and not other municipalities. Haynes said the county’s process produces the calculation forms from assessment values and that the tax-rate field used to compute the prior-year adjusted levy is not shown on the calculation form; he told the commission he had requested that the State Board of Equalization add an explicit step or line to show which prior tax rate was used. He also told commissioners he will raise the issue at the State Board’s regular meeting in Nashville on Oct. 20.

An external audit of Red Bank’s budget numbers discovered the discrepancy during a routine fall audit; the city’s auditors traced the variance to the assessor’s entry and notified city staff. The auditors were publicly thanked by the commission for identifying the problem before tax bills were mailed.

What the city said it will do next: Granholm said the city will “work through” the budget implications in the coming weeks and months and review options that could include drawing on fund balance or deferring budgeted items. Haynes said he will appear before the State Board of Equalization in Nashville to discuss the error and the request to revise the calculation form to include the tax rate used in the prior-year levy computation. No formal vote or ordinance was recorded at the special called meeting.

Public comment included residents urging clear, proactive communication with the community about the error and its likely effects on services and taxes. One commenter asked whether the state had ever provided financial relief to municipalities harmed by similar mistakes; county and assessor officials said remedies depend on timing and certification and that statutory pathways exist but are limited once tax bills are mailed.

The commission closed the meeting with instructions to pursue the state-level conversation and to return to the issue for budget decisions; no formal remedy was adopted during the special call.