Rocky Top council OKs tax increase
Second reading will be Monday, July 28
Rocky Top’s property tax collections for the new fiscal year 2026 will increase by about $65,000 overall under a new tax rate approved by the City Council on first reading on Thursday (July 17).
The council will hold a public hearing on the new tax rate at 5:30 p.m. Monday (July 28), and expects to approve it on second and final reading during a special called meeting that will follow the public hearing, beginning at 6 p.m.
During this same special meeting, the council is expected to pass on second and final reading Ordinance 614, which amends the city’s zoning ordinance to prohibit storage facilities from being allowed in the C-4 downtown Central Business District.
City Manager Mike Ellis said the change is needed because the city wants to reserve the downtown business district for consumer businesses that bring customers into the area to shop. Converting buildings into storage-rental places does not fit into the city’s vision for the downtown area, he said.
As for property taxes, essentially the tax rate is rising about 12.6 cents per $100 assessed property value over the previous year’s actual rate, with the additional money generated going to help pay for an increase in health-insurance premiums for city employees, Ellis said.
The new tax rate per $100 evaluation will be nearly $1.28. While that is well below the city’s fiscal year 2025 tax rate of $2 per $100 evaluation, the new rate takes into account the increased property-value assessments brought on by a countywide reappraisal that took place earlier this year.
Total property-tax collections for the new fiscal year, which began July 1, will total about $1.625 million, up from the estimated $1.57 million collected during the 2025 fiscal year, which ended June 30.
The 2025 budget, which passed May 27 on a 4-0 vote on second and final reading by the council, includes 3% raises across the board for the 27 city employees.
That measure did not include the tax rate for the new budget year, which was not able to be set until the city got its certified rate from the state Board of Equalization earlier this month.
The certified rate provided by the state was designed to take into account the average increase in property values, so as to make the reappraisal close to “revenue neutral” for local governments as required by state law.
To go beyond that rate, as Rocky Top has chosen to do, the city was required to go through the formal process of raising property taxes by way of an ordinance and a public hearing.
In the new budget, the city plans $3.025 million in general fund expenditures for the year, against expected revenue collections of $2.839 million.
The spending plan includes capital expenditures that would be offset by grant money.
Other 2026 revenues are projected to be $820,409 from the state, $20,676 from the federal government, and $353,000 from “other sources,” according to the proposed budget.
These amounts do not include utilities, which are covered by a separate budget.
Among the planned expenditures are $994,878 in salaries for the city’s employees.
The city is using a combination of grants and State Revolving Fund loans to pay for massive sewer repairs.
Ellis said the SRF loans come with a 40 percent “forgiveness,” rate, which means the city would have to repay only 60 percent of what is being borrowed.
