May 20, 2022 10:00am

Justifying Tax Hikes

May is Budget Month for local governments, so we asked Power Poll members for their opinions on property tax increases.

Photo of Scott Barker
Knoxville, TN Correspondent
 
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Knox County hasn’t raised property taxes in 23 years and almost certainly won’t again this year, but an overwhelming majority of Power Poll participants say that infrastructure needs are great enough to justify a future property tax increase. A smaller majority of respondents said that overhauling the pay structure for City of Knoxville employees was a good enough reason for the property tax hike City Council approved earlier this week.

May is Budget Month for local governments, and though both city and county mayors had already proposed their spending and tax plans for fiscal year 2022-23 when it came time for this month’s survey, we asked Power Poll members for their opinions on property tax increases. A majority of respondents said they’re warranted for particular needs. More than two-thirds of respondents said the need for infrastructure to accommodate growth outside the Knoxville city limits would justify a countywide property tax increase. Fifty-five percent said establishing a new pay structure that will result in pay raises for most employees justified the 50-cent rate increase City Council approved on Tuesday.


The Power Poll is not a scientific poll but a survey of views and attitudes among community leaders from government, business and nonprofit arenas. This month’s survey went out to 568 members, and 143 responded — a response rate of 25.18 percent.

According to the results, 91 percent of respondents live in Knox County and must pay county property taxes (assuming, of course, they are property owners). A little more than half live inside the Knoxville city limits, so they would have to pay both city and county taxes. An unknown number of those living outside the city limits would also pay city taxes on property they own inside Knoxville.

A Republican with libertarian leanings, Knox County Mayor Glenn Jacobs has proposed a $954 million budget for next year that does not include a property tax increase. County Commission, which has a solidly Republican majority equally loath to raise taxes, is poised to vote on the budget on June 1. The county hasn’t raised the property tax rate since 1999, though it raised the wheel tax to $36 per vehicle by referendum in 2004. For a two-vehicle family owning a $250,000 home, the wheel tax equals a 5.43 percent increase to their property tax bill. The county has been able to keep a lid on the property tax rate because of growth. Between 2000 and 2020, Knox County’s population increased 21.7 percent, with most of the growth occurring outside the Knoxville city limits.

The county’s growth hasn’t been pain-free. Almost every month, residents in unincorporated areas of Knox County attend Knoxville-Knox County Planning Commission or County Commission meetings to object to new residential developments near their homes. Invariably, one of the objections is to the possibility that increased traffic would make a rural area’s narrow, curvy roads less safe.

Earlier this month, for example, dozens of residents of fast-growing Hardin Valley attended a Planning Commission meeting to fight a development that would bring about 117 new residences to a 58.6-acre parcel. Planning commissioners approved the development. That scenario plays out month after month — Planning staff reports that the amount of land rezoned from agricultural to residential use in 2020 and 2021 was the highest since the Great Recession.

The county has launched an effort to revise its growth and transportation plans through a process called Advance Knox. While infrastructure needs will be a focus, the means to pay for improvements would have to be determined. Candidates for Commission seats in this year’s election say infrastructure improvements should be a priority, though many also oppose property tax increases.

The results of this month’s Power Poll came in too late to have any effect on City Council’s vote on Tuesday to approve Knoxville Mayor Indya Kincannon’s $434.1 million budget and the 50-cent property tax hike to fund it. Though the city holds nonpartisan elections, Kincannon and a majority on Council are Democrats. The primary driving force behind the 12.9 percent increase in the city’s budget is an overhaul of the pay structure for city employees, which will cost $16.2 million in new expenditures next year and is a recurring cost in future years. The Kincannon administration said the overhaul, which would result in pay increases for nearly every city employee, is needed to make the city a more competitive employer and close chronic workforce shortages.

More than 8 percent of the city’s 1,590 positions are currently unfilled, with vacancies particularly acute in the Police and Public Service departments. The Knoxville Police Department had so few applicants earlier this year that it couldn’t begin a class at its academy. Council members unanimously supported better pay for city workers, and only one — Janet Testerman, who is running in the Republican primary for a state House seat — voted against the tax increase.

Public opposition to the tax increase was muted. Only one person, Republican County Commissioner Larsen Jay, spoke out against it at Tuesday’s meeting. Jay recently moved inside the city limits, is running for re-election to his at-large Commission seat, and is rumored to be mulling a challenge to Kincannon in 2023. Unlike their county counterparts, City officials have now raised property taxes three times since the turn of the century. City Chief Financial Officer Susan Gennoe said this year’s property tax increase will be sufficient to fund budgets for at least three years and possibly longer, depending on future economic conditions.

The questions and responses, rounded to the nearest percentage point, were:

Revenues from the city’s proposed property tax increase would primarily go toward funding employee compensation to address workforce shortfalls. Does this justify the tax increase?

Yes: 55 percent

No: 34 percent

Unsure: 9 percent

Candidates for County Commission by and large agree the county needs to invest more in infrastructure to accommodate development outside the Knoxville city limits. Would infrastructure investment justify a future property tax increase?

Yes: 68 percent

No: 25 percent

Unsure: 8 percent

Where do you live?

Knoxville: 51 percent

In Knox County, outside the city limits: 40 percent

Other: 9 percent

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