KINGSPORT, Tenn. (WJHL) – On Monday, Kingsport city leaders convened to deliberate on the budget for the fiscal year 2026. The Board of Mayor and Aldermen, along with city staff, examined the general fund, anticipating some potentially difficult choices.

City Manager Chris McCartt presented two different budget options.

“The city manager always faces the challenge of crafting a balanced budget without increasing taxes or fees,” McCartt explained. “We then proceed to outline a recommended budget, which considers many elements discussed in the balanced budget while highlighting areas that require extra revenue.”

On the recommended budget, McCartt accounted for what he calls necessary money for projects.

“We address the critical gap in capital needs,” he continued. “Our discussions included intersections, long-lasting structures, enhancements to bridges, a long-overdue new fire station, and investments in our educational institutions.”

The recommended budget also included a rise in employee pay. According to the budget, police pay would have a Cost of Living Adjustment (COLA) of 10%, fire pay would see an 18% adjustment, and general city employees would see an 8% adjustment.

McCart said this pay adjustment would help keep employees within the city.

“The largest part of this was the realization that we needed to get very competitive with pay,” he said. “And, again, realizing when you lose revenue, you lose that ability to stay competitive. And so we have to make adjustments in order to sustain that.”

The balanced budget would not allow for the pay adjustments or infrastructure improvements. McCartt said in order for these needs to be met, many city residents will pay more in taxes.

“We talked a lot about the impact that [Consumer Price Index] has had,” he said. “How we’ve tried to absorb that without a tax increase. We talked about the expected level of service that our citizens desire. They’ve stated that over and over to us what they desire. Well, in order to meet that, in order to adjust for inflation, in order to continue with the same level of service, in order to address employee pay, infrastructure needs, all those things, we have to make an adjustment.”

That tax hike would be seen through property taxes. According to McCartt, the current tax rate is $1.99 per $100 of assessed value. The budget proposed a rate of $1.82. However, with the recent property reassessment, it would amount to a tax increase.

The board will discuss utilities and Kingsport City Schools on Thursday. The budget will then be finalized before its first reading in June.