After recent losses and lack of growth in revenue Alcoa has now raised its property tax rate from $1.96 to match Maryville’s rate at $2.27.
Alcoa commissioners voted to approve the fiscal 2020 budget and subsequent property tax increase with a three-vote majority Tuesday night.
Commissioners Jim Buchanan and Ken White voted no on the resolution after expressing their fear the tax increase may have a significant impact on the community, especially those living in poverty.
“This tax increase is to replace the revenues we’ve basically lost in actual dollars and lack of growth in our revenues over the past three or four years,” City Manager Mark Johnson told commissioners. “It gets us some things we need to have and hopefully it will bridge the gap between where we are right now and the new development that we anticipate going on over the course of the next couple of years.”
Johnson told gathered city officials during a May budget workshop that a combination of issues had damaged the city’s fiscal intake including an error in airport revenue, losses resulting from a combination of the state’s internet sales tax system and Alcoa’s demographics, current property taxes and consumption taxes.
The result left the city nearly $1 million in the red.
Johnson showed in his presentation there were two ways to manage the situation: either cut spending or raise revenue. He argued that because a cut in spending would have meant a reduction in services and raising sales taxes was not feasible, property taxes would have to go up.
Comparing current rates to neighboring governments, Johnson showed how, over time, Alcoa had dropped its rate to $1.96 where it has stayed consistently since 2009. Maryville and Blount County’s rates have fluctuated over the year and now sit at $2.27 for Maryville and $2.47 for the county.
He went on to note there were two theories of tax increases. Some governments choose to increase taxes gradually and some to increase when needed. He said Alcoa had chosen the “when needed” model, moments later posing the question “what will our citizens think?”
Johnson then showed responses from Alcoans rating the value of city services for tax dollars, showing 88.3% found these to be good or excellent. A total 96.1% of Alcoa’s population rated the city a good or excellent “overall place to live,” statistics from Johnson’s presentation showed.
But there was trepidation on the commission as the tax hike came to a vote.
“(This increase) seems to me like it’s going to be a real burden on quite a few people,” Commissioner Ken White said before the vote. “Even if they rent property the owner of that property is going to have to go up.”
Commissioner Jim Buchanan thanked White for his comments. “We have to keep in mind the community we’re in ... A large portion of people in this community we’re in are on fixed income,” he said. “This is a big impact.”
“I hate to do it,” Commissioner Vaughn Belcher said after a pause.
“I hate to, too,” Mayor Clint Abbot responded, though he was eager to pass the resolution with as little discussion as possible.
“It makes sense when you understand the reasons that we have to do it,” Commissioner Tanya Martin.
Johnson said planned development in the near future will hopefully curb some of the city’s financial woes, pointing out that some of the first developments in the Springbrook Farm project are set for platting in a “couple weeks.”
Johnson looked to City Planner Jeremy Pearson to confirm and Pearson said he was “hoping” development in the area may come as soon as this summer.
“There’s an awful lot of stuff going on,” Johnson said. “And I think it will take some time.”
The fiscal 2020 budget will take effect beginning July 1.