KNOXVILLE, Tenn. (Story courtesy of WVLT) – At Knoxville’s State of the City Address, Knoxville Mayor Indya Kincannon released a balanced, no-new-taxes seventh budget and State of the City Address.
“I am proposing a budget that’s lean but continues to prioritize public safety, affordable housing, parks, and high-quality people-focused services,” Kincannon said. “At the same time, this budget represents a forward-looking commitment to great public spaces, quality of life, job creation, and proven partnerships that get results.”
Kincannon presented her seventh budget and State of the City Address at the Urban Wilderness Gateway Park.
The city’s property tax rate remains unchanged at $2.1556 per $100 of assessed value — the lowest tax rate since 1974.
Budget challenges
Kincannon’s proposed budget reflects the realities of inflation, rising operational expenses and slowing revenues.
Sales tax revenues are forecast to grow by 2.2 percent, while inflation is anticipated to hover at 3 percent.
The expected rate of return on pension investments has been dropping in accordance with the results of a 2022 actuarial study, which lowered the expected rate of return on investments from 7.25 percent to 7 percent over five years. The city will contribute an extra $2 million above the amount paid in the current fiscal year to support the pension investment fund.
Inflation-fueled rising costs and flat sales tax revenue are driving a 6.5 percent increase in the proposed General Fund operating budget, while $6 million is being withdrawn from the city’s $30.6 million Unassigned Fund Balance.
Financial position
The city’s General Fund Balance reserves currently total approximately $114.6 million. Knoxville’s bond ratings are at an all-time high, and the city’s debt per capita is the lowest of Tennessee’s six largest cities.
Public safety
In the address Kincannon said public safety remains a top priority. The proposed budget directs $102.1 million to salaries and benefits for police officers and firefighters.
The budget includes $9.5 million for roads, bridges and other transportation safety upgrades and repairs, $1.6 million for Vision Zero programs such as sidewalk repairs, ADA curb cuts, traffic calming, intersection improvements and modernization of school zone flashers, and $2.7 million for renovation of Fire Station No. 15 in Fountain City, upgrades in Fire Department life-saving equipment, radios and defibrillators.
More than $2 million is allocated toward violence interruption and prevention, as well as support for community groups that empower youth.
The budget includes five new Police Department positions, which reflects the first increase in KPD’s authorized staffing level in decades.
Affordable housing
Kincannon is proposing to invest more than $8 million in affordable housing — including $4.5 million to support the $200 million Transforming Western partnership project, $2.5 million to the Affordable Rental Development Fund, and $900,000 in city and philanthropic funds to foster affordable home ownership. That includes nearly $500,000 to help Habitat for Humanity build a new Knoxville community.
More than $2 million is allocated to prevent homelessness and aid those experiencing housing instability. The city’s support for warming centers would increase by $200,000 to a total of $500,000 — and, with a Knox County match, that support totals $1 million.
Parks and recreation
Kincannon is proposing to add four new employees as a Public Service Department crew assigned full-time to Chilhowee Park. This is in keeping with Chilhowee Park transitioning away from an event venue and being managed through Parks and Recreation. Kincannon is also budgeting $2 million for Chilhowee Park capital improvements — an advisory group has been formed to recommend park priorities.
The budget includes $7.1 million for improvements to parks and recreation facilities, greenways, pools, playgrounds and ballfields, in response to the recently adopted Parks & Recreation Master Plan. That includes $1.5 million to construct the First Creek at Austin Greenway Connector.
Funding will increase pay for Parks and Recreation’s seasonal employees — pool lifeguards, summer camp and after-school program employees, bus drivers — from the current $9 to $10 an hour range to $13 to $15.
The budget includes $1.4 million for Zoo Knoxville capital projects, including support for the Rhino Exhibit, in addition to supporting operational funding.
Other priorities
The budget allocates $26.5 million as the city’s combined six-year commitment to Transforming Western. This multi-year investment supports the more than $200 million KCDC-led initiative that’s creating almost 500 modern, permanently affordable and market-rate homes while re-invigorating the residential, recreational and commercial components of one of Knoxville’s largest neighborhoods.
The budget includes $2.35 million for energy-efficiency upgrades to roofs and heating/ventilation systems at city buildings and $1 million for sustainability innovations and community charging stations.
The budget allocates $3.3 million to support Knoxville’s key economic development partners — Knoxville Chamber, KCDC, Visit Knoxville, Knoxville Entrepreneur Center. Continued funding will support business development in Knoxville’s Latino/Hispanic community in partnership with Centro Hispano, and funding for the Knoxville Entrepreneur Center supports the launch and expansion of small businesses. The budget includes $150,000 to support KEC’s move to larger space to accommodate its expanding community.
The budget includes $2 million for Community Agency Grants to support local arts and social service nonprofits, $900,000 for support for nonprofits addressing issues ranging from food insecurity to housing instability to after-school and summer programs such as Legal Aid, Second Harvest, Senior Citizens Home Assistance Service, Community Schools, Boys and Girls Clubs, and $338,000 for support for health, mental health and addiction service providers such as River Valley Health, Kim Health and McNabb Center.
The budget allocates $500,000 — matched by Knox County for a $1 million total — to support operations at the EmPATH facility in North Knoxville.
Debt reduction
Thanks to a $25 million lump sum payment on Convention Center debt last year, the city is paying $4.1 million less in FY 2026-27 for bond debt payment. Over time, the lump sum paydown will save taxpayers $30.2 million.
The city’s debt load is relatively small: 15.7 cents on the $2.1556 tax rate goes to debt service, while almost $2 goes to the General Fund to pay for services and operations.
Next steps
Kincannon’s proposed budget will be presented to City Council for first reading on April 28, with a legislative budget hearing and public hearing to follow on May 7. Council’s second reading of the budget is scheduled for May 26. The new fiscal year begins on July 1.
You can read all supporting budget documents here: https://www.knoxvilletn.gov/cms/One.aspx?portalId=109562&pageId=207344
