The new rate for the city, approved by the Tennessee Board of Equalization, increases the rate property owners will pay per each $100 of assessed value by 9 cents.
That means the certified property tax rate for city residents will increase from $1.49 per $100 of assessed value to $1.5804.
The certified rate does not include the $18.51 cent increase approved March 25 by Council members. That amount, plus the certified rate, equals $1.7655 per $100 of assessed value Cleveland residents will pay in property taxes.
The county tax bill, which is also paid by city residents, will increase 4 cents from $1.7920 to $1.8254. City residents pay city and county property taxes.
Bradley County reappraises property on a four-year cycle as mandated by the state of Tennessee. The property tax rate is adjusted up or down depending on the total value of real and personal property in the city and in the county. Some tax bills may increase. Some may decrease or stay the same. Overall, city and county government cannot take in more revenue in the year following a property re-evaluation.
The total tax base in the city decreased from $1.105 billion in 2009 to $1.066 billion.
“Because the appraisal went down, the rate has to go up because you as a city or a county are guaranteed the same revenue that you received in the previous year. That’s why the tax rate must go up,” Casteel said. “This is the first time the re-evaluation process has required us to increase tax rates. Every time before, tax rates would decrease. That’s what is so unusual this time, that property values in Cleveland and Bradley County have gone down,” she said.
According to the Bradley County Assessors office website, Bradley County was last reappraised in 2009. Bradley County adopted the four-year reappraisal cycle as allowed by law, and according to the rules and regulations to the State of Tennessee and the State Board of Equalization.
State law requires that all property be periodically reappraised at market value. The appraisals are determined from the real estate sales occurring during the calendar year preceding the reappraisal year. All factors of the ever-changing real estate market are considered.
A new appraisal does not necessarily mean a change in property tax revenue for any funding body. Tennessee’s Certified Tax Rate law provides a revenue-neutral condition for all jurisdictions after a mass reappraisal. The law requires the tax rate adjustments to produce the same amount of revenue as the previous year. For example, if Bradley County’s total revenue from property tax is $40 million for the previous tax year, the reappraisal year tax rate must be adjusted to generate the same amount of revenue.
During the 2009 reappraisal the Bradley County tax rate was lowered from $2.02 to $1.7920 per $100 of assessed value. By the same convention, if values go down the tax rate will see an increase to maintain the proper funding level to meet the obligations of the jurisdiction.
This does not mean individual tax amounts will not change. It means local government cannot receive a gain or “windfall” of new tax dollars, nor a loss of tax dollars from conducting a reappraisal program.
The Bradley County Commission, the Cleveland City Council, or the Charleston City Commission must approve any rate other than the certified tax rate. These bodies must also advertise the intent of superseding that rate.
The Cleveland City Council should adopt the new tax rate at its next meeting on July 22.