Mayor Tim Kelly Proposes Budget With Unprecedented Housing Investments, No Tax Increase


Budget includes $10 million for paving roads, 3 percent cost-of-living increase for city workers

Chattanooga, Tenn. (Wednesday, May 11) — Chattanooga Mayor Tim Kelly on Tuesday presented his new budget to the City Council, keeping his promise to invest an unprecedented $33 million into thousands of homes that Chattanoogans can afford — with no tax increase.

The median price of a home has increased 80.7 percent since 2015, leaving 43 percent of renters defined as “housing burdened,” or spending more than 30 percent of their income on housing. And more than 20 percent of renters in Chattanooga are “housing insecure,” defined as spending more than half of their income on housing, and putting them at severe risk of eviction and potentially, homelessness. 

The mayor’s $33 million seed investment will catalyze the city’s $100 million affordable housing initiative, which will include partners in the nonprofit, philanthropic, financial and homebuilding sectors. The multi-pronged approach will include subsidies, gap financing, land acquisition, down-payment assistance and partnerships with community financial institutions to create homes for Chattanoogans. 

The budget also allocates more than $2 million toward homelessness prevention and rehousing efforts, including funding for a new temporary sanctioned encampment, and the rehabilitation of a former hotel into permanent supportive housing. 

At its core, the new budget — which covers fiscal years 2022 and 2023 — incorporates the mayor’s One Chattanooga strategic plan, a broad, systems-focused vision that he unveiled at a State of the City presentation last week. 

“This budget includes some bold investments, and we must continue to be bold and aggressive as we implement the One Chattanooga strategic plan,” Kelly said Tuesday. “We can’t afford not to.”

The proposed budget is available for the public to view at, and members of the public will be able to attend informational sessions and a public hearing prior to the first reading of the budget ordinance on June 7. Budget education sessions will take place at 3:30 p.m. in the City Council chamber on Tuesdays through May 31, and a public hearing will be held on May 31 at 6 p.m.

In his budget, Kelly also highlighted a robust $10 million budget for repaving roads, part of a broader $131 million investment into infrastructure, including sidewalks, bridges, traffic signal synchronization, sewer and stormwater projects, and in fulfillment of his commitment to invest $40 million into road repair over four years.

In Kelly’s first year, the city repaired more than 33 lane miles of asphalt and fixed more than 11,411 cracks, divots and most importantly, potholes. Kelly said he would not let up on efforts to revitalize the city’s aging infrastructure, which has been one of residents’ most-voiced concerns.

“Sometimes we have to make hard choices, but we are prioritizing the things that matter most for our community as a whole,” Kelly said.

The budget also includes a number of investments into a more effective and responsive government, including additional inspectors and specialists, additional truck drivers, and an innovation fund to help the city fuel new ideas to address resident concerns more effectively.

“This year’s budget is both bold and fiscally sound, responsibly taking on our city’s most persistent challenges, while also looking ahead to build long-term prosperity for every resident in every neighborhood,” said Brent Goldberg, the city’s chief financial officer. “As the city embraces a culture of continuous improvement, we’re working to streamline processes and prioritize innovative approaches to ensure that we are wise stewards of taxpayer resources.”

In recognition that providing essential services depends on the city’s corps of essential workers, the new budget also includes a 3 percent cost of living adjustment for city workers, including sworn employees, raising the city’s minimum wage to $15.45/hour. 

As a service-focused entity, about 62 percent of the city’s operational expenditures go toward employee pay and benefits. The largest portion of the general fund — 58 percent — goes toward first-responders and essential workers, with the Police Department, Fire Department, and Public Works making up the bulk. 

The city is absorbing increases in health insurance costs this year to ensure that employees won’t see a premium increase. The city will also continue to supplement funds for federal Head Start workers to help strengthen the city’s Pre-K programs.

This year’s budget builds on the mayor’s $30 million investment last year into employee pay, at a time when the city was hemorrhaging workers and in danger of browning out fire stations and cutting back on essential services. In bringing employees up to a market rate of pay, they received an average 15 percent salary increase, which allowed the city to restore and expand many of the services on which our residents depend.