Chattanooga council adopts 2025–26 budget, raises property tax rate to $1.93 after heated public hearing

The Chattanooga City Council on Aug. 26 adopted an amended fiscal-year 2025–26 budget that raises the city property tax rate to $1.93 per $100 of assessed value, following a public hearing with extended remarks from residents, labor groups and first-responder unions.

The council voted 5–4 to approve the mayor’s budget amendment after an alternative proposal from Councilman Henderson — which would have capped the rate at $1.69 and later was amended on the floor to $1.73 to add funding for Fire Station 21 — failed to gain a majority. Council members debated competing priorities including police and fire pay, fleet replacement and program cuts across departments.

Why it matters: Council and the public framed the vote as a tradeoff between bolstering pay and equipment for first responders, preserving public services such as 311 and community programs, and limiting a near-term tax increase for homeowners facing steep reappraisals. Mayor Kelly and administration officials argued that inflation and higher municipal procurement costs make the increase necessary to maintain service levels and recruit and retain personnel.

Councilman Henderson, sponsor of the alternate budget, told the hearing his plan would raise roughly $15 million per year at the proposed lower rate and combine that with $5 million set aside and approximately $3 million in departmental cuts to cover priorities. “This is a property tax increase,” Henderson said in his public presentation, adding the alternate plan was intended as a “first amendment to item 8a.”

Residents and organizations filled the council chamber for the hearing. Some speakers, including a number of current and former first responders and union representatives, urged council to approve the higher rate to address pay competitiveness and critical equipment and vehicle shortages. Justin Cole, president of IVPO and a Chattanooga police officer, described vehicle shortages and flooding-related response needs and said: “Support Mayor Kelly’s proposal.” Jack Thompson, president of the Chattanooga Firefighters Association Local 820, said delays in vehicle and truck procurement meant “next year is not a good option” and urged immediate action.

Other speakers opposed the higher rate on affordability grounds. Leanne Wiles of District 2 urged the council to adopt the mayor’s plan rather than the amendment? (transcript: Wiles opposed Henderson’s counterproposal and urged adoption of Mayor Kelly’s compromise) because, she said, the alternate plan would leave a “$33,000,000 gap cutting deeply into public safety, economic growth, and community development.” Several speakers, particularly residents on fixed incomes and representatives of seniors and social-service providers, warned that steeper tax bills could push low- and fixed-income residents into financial distress.

Process and timeline: Council opened the hearing under the budget committee chair and allowed two-minute public comments, then took up ordinance votes later in the meeting. The body followed Robert’s Rules–style amendment procedure: the mayor’s proposal was the main motion; Henderson moved to amend it by replacing the mayor’s 1.93 rate with his alternate 1.69 plan. A secondary amendment to raise that alternate to 1.73 and add funding for Ladder Company 21 passed on the floor, but the amended alternate ultimately failed on a 5–4 vote, after which the council returned to and approved the mayor’s 1.93 proposal.

Votes at a glance (key items handled during the session): - FY2025–26 operational budget amendment (Item 8a): Ordinance to amend FY25–26 budget and fix tax rate at $1.93 — PASSED, roll-call vote 5–4 (Yes: Councilman Elliott; Councilwoman Dottley; Councilwoman Burrows; Councilman Clark; Vice Chair Noel. No: Councilman Harvey; Councilman Davis; Councilman Henderson; Chairwoman Hill). - Alternate budget amendment (Henderson/Davis) to set rate at $1.69, later amended on the floor to $1.73 to add funding for Ladder Company 21 — FAILED (secondary amendment to add Ladder Company 21 passed; the overall amended alternate failed 5–4). - FY2025–26 capital budget amendment (increase by $13,350,000 from general fund operations) — PASSED (roll-call majority recorded). - Final-reading ordinances closing and abandoning multiple sanitary-sewer easements (Commercial St./Luptonville Crossing and Palmetto St.) — PASSED (voice votes recorded by clerk). - Selected resolutions and grants (Older Americans Act senior services grant $20,000; appointment of Jonathan Mason to the Health, Education and Housing Facility Board; several contracts for parks and public works) — APPROVED (motions and seconds recorded; roll or voice approvals entered on record).

What council and administration said: Mayor Kelly framed the increase as necessary to offset the after-reappraisal revenue-neutral rate’s failure to account for sharply higher municipal input costs. “The debate around property taxes has always been confusing, so let me just recap the facts for the record,” he told the chamber, noting an increase in procurement costs and arguing the $1.93 rate was “a Budweiser budget…just enough to get the job done.” Council budget leaders described the process that produced the alternate proposal as an effort to balance service preservation and tax impacts.

Implementation and follow-up: The adopted FY25–26 amendment includes sworn-employee pay-plan changes and additional funding lines for police and fire equipment and vehicles. Council members signaled they expect ongoing work on multi-year budgeting, forecasting and process improvements to reduce these recurring, high-stakes decisions; several members asked for a forward-looking strategic plan and more routine fiscal forecasting to avoid similar conflicts in future cycles.

Community context: The hearing took place amid a widely reported county reappraisal that officials and residents said produced median assessment increases in many neighborhoods (some speakers cited increases of 50–60% or more since 2021). Commenters tied tax-bill increases to higher reappraisals, inflation-driven cost increases for city purchases, and concern for seniors and fixed-income households. Multiple speakers asked the council to pursue additional relief options such as the senior tax freeze and to press the county on appraisal issues.

Looking ahead: The ordinance and amendments approved on Aug. 26 will move to second reading schedules as required by the city’s code and will be reflected in the city tax bills when issued. Council members said they plan continuing discussions on long-term budgeting mechanisms, public engagement, and program prioritiation.