KINGSPORT, Tenn. (WJHL) — Kingsport city leaders gave final approval Tuesday night to a $280-million budget containing a property tax increase plus water and sewer rate hikes.

The budget includes a 12-cent property tax increase, which will bring the rate to $1.99 per $100 of assessed value. According to the city, the tax hike amounts to a 6.4% increase. The owner of a $292,000 home will pay $7.31 more per month, according to the city.

It is the city’s first property tax increase since 2014, when rates were increased by 13 cents.

“We do not take it lightly that we are having to raise taxes,” City Manager Chris McCartt told the board Tuesday night.

McCartt said the increase was necessary for the city to continue offering competitive salaries and wages. Staffing shortages have impacted several city departments. The budget includes a 5% cost of living adjustment and a step increase for city workers that McCartt hopes will increase employee retention and attraction.

“Due to the number of vacancies, an issue currently impacting both the public and private sector, we are at critical staffing levels to provide the level of service our citizens expect,” McCartt said. “The number of unfilled positions, including public safety jobs, will continue to grow if we do not remain competitive on salaries. We simply cannot sustain a skilled workforce and deliver the services our citizens expect with a 20% turnover rate.”

The city increased pay for nearly 400 positions — mostly entry-level, a news release from Kingsport noted — allocating an additional $800,000 in salaries throughout the current fiscal year.

“In order for us to stay competitive and to be where we need to be to move the city forward, this was the only option that we had absent of making significant, and I mean significant cuts,” McCartt said.

According to McCartt, most city departments’ operating budgets were kept flat in the budget and operational cuts have been made.

To top it off, the city is also being squeezed by inflation and high gas prices.

“I’ll give you an example — the city is paying, right now, $173,000 a month for fuel – gas, diesel, propane, even,” Mayor Pat Shull told News Channel 11. “And as contracts expire, you know, we’re subject to rate increases for what we pay for fuel.”

In addition to the 87% increase in fuel costs, a news release from city officials also cited that the city experienced higher costs with its retirement plans and health insurance.

Tuesday night, the board also approved water and sewer budgets, both of which include rate hikes. City water customers will see a 7.5% increase and sewer customers will see a 13.5% increase. The new rates will take effect July 1 and run through June 30, 2023.

City officials stated that Kingsport’s water and sewer rates still remain lower than those seen in Johnson City, Elizabethton and Morristown.

During a previous BMA meeting, Deputy City Manager cited flat revenue, aging infrastructure, regulatory pressure, and a state comptroller’s directive as reasons behind the water and sewer rate increases.

The original budget presented in May did not include a tax increase, causing it to “[fall] short of providing the necessary funding for employee pay, service delivery needs across multiple departments, as well as firmly positioning the city to manage present and future growth,” a release from Kingsport stated.

In addition to the tax increase, the budget approved Tuesday also includes $2.7 million for paving along with funds set aside for renovations at schools, the Justice Center, Academic Village and bridges.