After tax hike vote, City Council has 7 days to pass new budget – what happens if they don’t?

CLARKSVILLE, TN (CLARKSVILLE NOW) – With Tuesday’s vote, the City Council rejected the 2021 city budget, including a 20-cent property tax increase and an expansive transportation infrastructure plan, leaving them only seven days to pass a revised budget in two voting sessions before the deadline.

Council members voted 7-6 to reject the budget, a reversal from last Thursday’s first reading. Karen Reynolds and Jason Knight changed their votes from the first reading (Reynolds had voted yes on first reading; Knight had abstained). With the addition of Richard Garrett and Dajuan Little, who were absent last week, that was enough to shift the results.

When asked about her change of mind, Reynolds told Clarksville Now she supports Mayor Joe Pitts’ Transportation 2020+ Plan, but she was unwilling to support the full 20-cent property tax increase to pay for it.

Reynolds suggested the city use federal COVID-19 relief dollars to supplement the budget and reduce the tax increase to 15 cents.

“We have a massive amount of COVID money. I believe we do not need to ask residents for the full 20 cents,” Reynolds said.

But city spokesman Richard Stevens told Clarksville Now that allocating federal COVID money before the rules for spending it have been set could put the city at risk of fines or having to return that money.

“Hope is not a strategy,” Stevens said. “The last thing you want to do is spend that money in ways that are not authorized and then have to pay that back.”

Knight told Clarksville Now he abstained from voting at the first reading in order to hear more input from constituents.

“I think the plan proposed has good focuses on trying to fix infrastructure,” Knight said. “I think the word ‘tax increase,’ is kind of a dirty word though. I’m sure there are other methods we could take a look at.”

One possible alternate solution Knight referenced was a plastic bag tax at grocery stores.

What happens without a budget?

The deadline for passing a city budget is June 30, giving council members seven days to come to an agreement. If they don’t, the previous year’s budget will be applied to 2021.

According to Stevens, the costs of a budget rollover would be “pretty dire.” Without funding, capital infrastructure projects such as the widening of Rossview Road would come to a halt. The city could also risk lawsuits and fines due to not meeting financial obligations.

Without a new revenue source, Pitts has said it will not be possible to fund the Transportation 2020+ Plan. Stevens said Pitts and his staff are currently meeting with city department heads to assess options for a new budget proposal.

While no dates have been announced, it is likely that another special session will be called within the next couple of days to begin the budget process anew.