Kelly Administration proposes $16.9 million addition to capital budget to make strategic investments

Plan deploys excess stockpile while maintaining best-in-class reserve fund levels

Chattanooga, Tenn. (May 22, 2024) – The Kelly Administration has unveiled a plan to provide a $16.9
million supplement to the Fiscal Year 2025 proposed Capital Budget to accelerate project delivery and
progress across areas of strategic focus like affordable housing, parks, infrastructure, public safety, and
early learning.

“Thanks to a long-standing record of responsible budgeting at the City, we have the opportunity to
leverage the moment in a way that will accelerate progress in areas that Chattanoogans care about
most. We’re proposing a calculated investment into our community to supplement our baseline capital
budget proposal for FY25, knowing that we can afford it and believing that deploying a small portion of
excess general fund reserves will help ensure the positive trajectory of our city without compromising
our triple-A bond rating or our reputation as one of the most fiscally responsible city governments in
America,” said Chattanooga Mayor Tim Kelly. “With this additional infusion of funding, we’re going to be
able to do even more with this budget – more to maintain and upgrade our parks, to meaningfully
impact the supply of affordable housing, to execute on critical infrastructure priorities, to enhance
public safety and to expand access to early learning. We’re confident the pay off for our future will far
exceed this one-time cost.”

The plan would be funded using a modest portion of the City’s surplus General Fund Reserves while
maintaining Chattanooga’s policy of keeping a robust reserve balance that consistently outperforms
reserve levels held by other similar cities. In 2006, the Chattanooga City Council adopted a policy
requiring the city to maintain a reserve balance of at least 15% of annual general fund revenues and
transfers in. This proposed drawdown would reduce the 34.8% balance to 30.9%, which is in line with
peer cities’ practice and more than twice the amount called for in policy. Freed reserves of $15 million
plus accrued interest of almost $1.9 million totals almost $16.9 million in new capital.

Adoption of this additional investment is subject to approval by the City Council, who will consider it
alongside the City of Chattanooga’s Proposed Budget for Fiscal Year 2025.