City of Chattanooga, Hamilton County on different budget paths in lean times

Staring at a $13 million shortfall this year, Hamilton County chose to cut millions of dollars from its budget, laying off 36 workers, freezing 20 jobs and ending some services.

Just 12 months earlier, Chattanooga looked at its own potential shortfall and raised property taxes by 37 cents.

Both options are tools local governments use, and the decision of which is best depends on circumstances, said Chattanooga Chief Financial Officer Daisy Madison.

"We both did the same things," Madison said, pointing out that the city has laid off some personnel over the last nine years, while the county has raised taxes three times in the same period.

City officials said the 37 cent tax increase will keep the city afloat for several more years. The city's 19 percent tax increase for 2010-11 paid for about 30 more police officers, for post-retirement benefits for city employees and to extend hours at recreation centers. The resulting cost was more than $100 per year for the owner of a median-priced home in Chattanooga.

The county's last tax increase, 26 cents, came in 2008 to help pay for an expansion of the Silverdale Corrections Facility. County officials this year said they cut the budget $13 million to stave off another tax increase for a few years.

Either option -- cutting budgets or raising taxes -- can be tough.

The 2011 city tax increase drew picketers to the City Council and sparked a recall effort for Mayor Ron Littlefield.

Last month, County Mayor Jim Coppinger walked into a room and told 36 people they no longer had jobs with the county.

"This was a really tough budget because of the reductions," Coppinger said. "These are real people, and all of us were very sensitive to what was occurring."

Littlefield said leaders decided to raise taxes rather than cut personnel or services that city residents expect, such as fire, police, parks and recreation and public works.

"That isn't a direction a city of promising endeavors should be taking at this time," he said.

But Madison stressed that the city has made cuts in the past. The city didn't raise taxes between 2001 and 2010, she said. Jobs were frozen and positions were cut.

"During that nine-year period, we cut people," she said.

She said the city's payroll changed little from $70.7 million in 2008 to $71 million in 2010.

Dr. David Foltz, a University of Tennessee political science professor, said governments across Tennessee respond to their electorates in ways that make sense for them.

"It's a judgment call," he said. "You have different bodies. Every jurisdiction is unique."

Ron Darden, a consultant for the University of Tennessee's Municipal Technical Advisory Service and former Red Bank city manager, said some cities in the region have cut services and some have raised taxes.

"It's a combination of both," he said.

Gary Hayes, consultant for the University of Tennessee's County Technical Assistance Service, said counties can and generally have cut during the recession as they have eaten up most of their reserves to stave off tax hikes.

"They have a no-property-tax-increase philosophy, right or wrong," he said.

But at some point, there are no more cuts to make and property taxes must increase, he said. County constitutional offices must be maintained, he said, and eventually governments can't "cut their way out of it."

"If you do make those cuts, who wants to stand in line for three hours to get their license tags?" he asked.

Staff writer Ansley Haman contributed to this report.

Connect with the Times Free Press on Facebook