City manager breaks down 24% Kingsport property tax increase

Yahoo

a day ago

KINGSPORT, Tenn. (WJHL) — Kingsport residents' property taxes will increase by 24% if the Board of Mayor and Aldermen (BMA) finalizes a fiscal 2026 budget they've already passed on one reading.
Kingsport City Manager Chris McCartt explained the main drivers of that proposed increase Friday in an interview with News Channel 11. The tax hike would increase city property tax on a home assessed at $300,000 by $239, from $979 to $1,218.
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The 24.5% increase dwarfs the Model City's previous two property tax rate increases. The rate increased 6.4% in 2022, which was the first increase since 2014, when the BMA raised rates 6.7%.
McCartt said rising costs that will allow Kingsport to 'maintain competitive pay for all employees' and address inflation are just one part of the equation. The other main driver is $3.8 million in lost revenue from personal property — the tax on equipment owned by businesses and manufacturers.
That came after a biannual 'ratio' adjustment two years ago. McCartt said the BMA had gone to extraordinary measures to avoid an increase since 2023, patching the $3.8 million hole — roughly equal to the city's annual paving budget — with one-time money and fund balances.
'When we got to fiscal '25, I told the board, 'I'm pulling the last lever. As we move into fiscal 26, we are going to have to make an adjustment,'' McCartt said.
The budget projects property tax revenues to increase from $45.6 million in the current fiscal year, which ends June 30, to $56.1 million next year. More than a third of that money, which will recur each year, is headed toward the city's paving needs.
'It restores the funding that was lost in 2023 that has been dedicated to our sustainable paving program,' McCartt said. 'Over the last couple of years we use one-time dollars to continue that while those recurring dollars went back in to balance other aspects of our operations.'
Specific paving priorities were part of a 16-page PowerPoint McCartt reviewed with BMA members to explain the budget. For 2026 they include $2.5 million for work in 'Area 29' in and around Cooks Valley Road.
KINGSPORT BUDGET PRESENTATION
'Since 2017, we have been in a catch-up mode, trying to get paving back in line with where the expectation is, where the industry average is, and this is a huge priority for the City of Kingsport.'
Annual borrowing payments on eight major infrastructure projects worth about $10 million is another use of the new money, McCartt said. Those include everything from infrastructure improvements to bridges and, the most expensive project, replacement of the heating and cooling system at Washington Elementary.
Those also include $650,000 to improve the Eastman Road/Jack White Drive intersection, which McCartt thinks will be an easy-to-see benefit of people's tax dollars.
'They are going to know that when they are going through that intersection. We've had high crash volume there. We need to improve sight distance, improve the ingress-egress coming out really both sides of that intersection.'
Additionally, about $4.5 million a year of the $10 million in new annual tax revenue will fund employee raises that average about 8%. Employee compensation was also cited as one reason for the most recent tax hike, in 2022, but McCartt said adjustments made then didn't turn out to be sufficient.
'We felt like we were at least going to be in the game and for the most part we have been until we got into fiscal '24 and fiscal '25,' McCartt said. 'We've even seen major adjustments be made by municipalities or county governments to address pay.'
He said a market study showed Kingsport hadn't kept up. The proposed budget includes raises that average about 8%.
'We're a service-based industry. It takes people to deliver the service that we provide police, fire, sanitation, parks and rec that's run by people…the employees that provide and really love providing services to the citizens, that's why they are in this business, they are now being compensated at a wage that is comparable to what the region is.'
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McCartt said he's hopeful that like BMA members, who had staff shave 9 cents off what was originally a 42-cent (31%) increase, property owners will look at the evidence and accept the results.
'When you look and add those up as a taxpayer, you then have the ability to go see, yeah January of '26, they're going to issue debt, there's an intersection that's being built and here's the PaveKingsport dot com site that shows where we're paving and the intersections and everything that's going to be done as part of the workforce program.'
'Raise taxes, you better be able to show exactly where those dollars are being spent,' McCartt said. 'I feel like we've been able to do so through this budget process.'
The proposed increase passed over the objection of Alderman Morris Baker. It has a final reading on Tuesday.
Because it was also a reappraisal year — and the average residential value growth of 72% exceeded the overall growth of 50% — the average homeowner is likely to get hit even harder than the 24% increase. McCartt said that's one more reason he's banking on what he says is a highly transparent process to convince most taxpayers they're getting a bang for their increased bucks.
'As a taxpayer, I want to know exactly where those dollars are going. If you come back and say they're going into general operations, that's not a good answer.'
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