Johnson City budget up 6%, no tax hike

JOHNSON CITY, Tenn. (WJHL) — Johnson City residents won’t see a tax rate increase in the coming year despite a 9% increase in projected operating expenditures, but the proposed fiscal 2025 budget does project needing $4.6 million from the city’s reserves to balance.

City commissioners approved a fiscal 2025 budget on second reading in a called meeting Thursday. The third and final reading is set for June 20.

The overall budget, not counting schools, is proposed to increase 6.3% for the fiscal year that starts July 1. The current year (FY24) estimated operating expenditures of $84.6 million would rise to $92.5 (9.3%) million for FY25, with total appropriation increasing from $114.5 million to $121.8 million.

“I think the obvious drivers are, in some cases, just the inflationary pressures across all the budget areas,” Commissioner Joe Wise said after the meeting.

The budget sets property taxes at $1.3541 per $100 of assessed value, which is the “calculated rate” determined by the Tennessee Comptroller’s Office following last year’s reappraisal of all properties inside Washington County. That recalculated rate, down from $1.98, is set after any reappraisal so the amount of revenue coming into a local government is the same as the year before the reappraisal.

On the revenue side, local tax revenue is projected to increase by just 1.3%, from an estimated $92.6 million in the current year to $93.9 million. Overall, revenues are projected at $117.2 million, compared to $116.2 million this year.

The city anticipates ending the current fiscal year on June 30 with a $1.6 million surplus, which would push its fund balance to $59.2 million. The budget projects drawing that down to $54.6 million next fiscal year, though the city’s “rainy day” fund makes up only about $21 million of that total.

“We have had a very conservative budget,” Wise said of the city’s spending in recent years. “We’ve been very conservative in our projections, we’ve not come to taxpayers looking for additional revenue, and we’ve managed to maintain services, including the paving schedules and some of these things that are important to residents just through a level of fiscal discipline.”

The city did raise its property tax rate by 14% last year, with much of that earmarked for a new Towne Acres Elementary School. Before that, city taxes hadn’t been raised since 2016.

Police, ‘general government’ grow the most

The police department represents the largest budget category, at $19.4 million, and also has one of the biggest increases. The proposed budget gives the department, which has added officers and is near full staffing for the first time in a couple of years, a nearly 16% increase over its estimated expenses for the current fiscal year.

Wise said those increases are largely the result of an increase in staffing, partly through reaching full staffing last year and partly because the city has added a total of 21 officers to its “force capacity.” The city had kept its force at a full staffing level of 154 for about two decades until the changes.

“All that is in an effort to keep the police department staffed at a level consistent with our population,” Wise said.

The general government category is slated for the biggest percentage increase. It will rise 25% from $5.2 million to $6.5 million.

Four of the 14 main budget categories are over $10 million. In addition to police, they are public works ($17.7 million), fire department ($15.1 million) and public works at $10.6 million. Together, those four categories make up just over two-thirds of the budget.

Despite the tax rate holding steady, the average homeowner will pay 15% more in property tax, because residential property values grew much more than commercial values did during the five-year reappraisal completed earlier this year. The residential appreciation averaged 68%, compared to 27% for commercial property. The average commercial property will thus see its taxes go down by 13%.

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