The city of Red Bank plans to raise its property tax rate by 20 cents in fiscal year 2019, going from $1.18267 to $1.39 per $100 of assessed value.

The tax increase is necessary to make up for the city's decrease in its share of sales tax revenue following the passage of the state IMPROVE Act last April, said City Manager Randall Smith. In addition to raising the tax on gasoline by 6 cents and on diesel by 10 cents over the next three years to pay for hundreds of road projects across the state, the legislation also changed the formula for sales tax distribution to cities and counties, decreasing the revenue received by cities.

Smith projects Red Bank will bring in $51,600 less in sales tax revenue due to the change.

The bill also phases out the 6 percent Hall income tax on investments by 1 percent each year until 2022, resulting in a $30,000 loss in revenue for Red Bank this tax year, he said.

Last year, the town of Signal Mountain raised its tax rate by 32 cents, citing the loss of the Hall tax as a primary factor. Mountain officials expected the town to bring in an estimated $125,000 less each year until the tax is completely phased out in 2022.

Another revenue loss for Red Bank is a result of the county's reassessment of property last year. State law prohibits local governments from earning more revenue just because property values go up and provides them with certified tax rates to ensure they keep their tax revenues level. The tax rate was reduced from $1.35 to $1.18, resulting in a $330,650 revenue loss for the city, said Smith.

Red Bank's tax hike isn't just to keep up with revenue losses. Mayor John Roberts said the city is experiencing growth and traffic has increased in the six years since the commission voted to remove the traffic cameras from city roads.

"We're changing the image [of Red Bank], and the infrastructure has not so much kept up with it," he said. "As things continue to grow, we're looking to spend $1 million in infrastructure."

The city plans to spend about $500,000 to resurface Morrison Springs Road and another $500,000 resurfacing secondary roads. Half that amount will come from the state street aid fund, and the tax increase will cover the other half, which would have otherwise come from the city's general fund, said Smith.

The last time Red Bank raised its property tax rate was in 2012, when the city began its 15-year plan to resurface all of its streets, Smith said.

The total proposed budget for FY 2019 is $5,658,448, roughly the same as 2018's total balanced budget of $5,668,428. It does not include a pay raise for city employees.

The final vote on the proposed budget will be at the city commission's next meeting Tuesday, June 19 at city hall.

At the meeting, commissioners also plan to make a decision on two ordinances involving the regulation of short-term rentals, which was postponed due to City Attorney Arnold Stulce's absence at the June 5 meeting.

Several residents of Gaylord Drive spoke at that meeting to protest a rental operating in their neighborhood, complaining that guests come and go at all hours, and that they are unable to distinguish between short-term rental guests and suspicious individuals who may be staking out the neighborhood.