Monty Millard

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While Red Bank residents will see their water bills shrink this year, they may face a hefty property tax hike.

Heading into the thick of the budget season, Red Bank officials are being forced to determine the best way to bill and collect their garbage collection fee after Tennessee American Water decided to stop providing that service for local municipalities this year.

In the face of what Mayor Monty Millard repeatedly has called "an extremely disappointing situation," Red Bank interim City Manager John Alexander said the city has two main options: Raise property taxes to include the fee, or collect the garbage fee separately.

At this point, Alexander estimates a 47 cent rise in Red Bank's current tax rate -- which stands at $1.10 per $100 of assessed property value -- could be necessary to include the fee.

If the city decided to bill the fee separately, it likely would have to double the current $12 garbage fee for the city to break even with all the costs associated with a billing process that likely would result in a lackluster collection rate, Millard said.

"That bill would be the last thing people pay if they were forced to choose," he said. "They'll pay their water, electric and gas before they pay their garbage fee. They'll pay their cable TV bill before they pay a garbage fee."

The water company was the ideal billing service because it could shut off the water of delinquent customers -- ensuring a nearly 100 percent fee collection rate, Millard said. The city paid $16,500 a year for the service.

Officials still are weighing how the potential tax hike would affect a range of property owners versus a flat fee.

"Someone with a lower house value could pay less than what they currently paying on their property tax versus what they're paying with a monthly fee of $12 a month," Alexander said.

There is still question how the change would affect the city's agreement with Hixson Utility, which services about a third of Red Bank residents.

The commission will meet several times next week to work on the proposed 2013 budget before a meeting for citizen input and the voting process begins. Those dates have not been set.