A county property tax hike is probably on the way, according to Shelby County Mayor Mark Luttrell.
That’s what he told the Memphis chapter of the Society for Human Resource Management Tuesday, Jan. 15.
“I think we are probably going to see a tax increase of some sort,” Luttrell said. “How much that tax increase is, we just don’t know yet.”
Luttrell commented during a “state of the county” speech to the group of 60 at the Holiday Inn University of Memphis.
He is still awaiting the results of the 2013 property reappraisal by Shelby County Assessor Cheyenne Johnson. She has said the reappraisal, which comes once every four years, should reflect the effects of the recession and as a result the current city and county property tax rates would produce a lower amount of revenue for both governments. Both rely heavily on property tax revenues and their growth.
“For the first time probably in your lives, you are going to see a reduction in the value of your residential properties – not so much the commercial properties,” Luttrell said. “To compound that reduction in revenue, we know we’ve got some big-ticket items we’ve got to pay for.”
The two items mentioned were funding for the consolidated countywide school district and funding for reforms of Memphis-Shelby County Juvenile Court worked out between the county, the court and the U.S. Justice Department last year.
Luttrell said he will have a more precise estimate of revenue projections in March. But he and his staff begin looking at budget numbers from different areas of responsibility funded by Shelby County government starting next month at a county government budget retreat.
With the merger of Shelby County’s two public school systems, city of Memphis funding to what are now Memphis City Schools ends at the end of the current fiscal year – June 30. That is approximately $68 million.
The juvenile court settlement, which avoids a federal court lawsuit over court practices by the Justice Department, comes with a lower price tag. But it still involves millions of dollars a year, much of it to build a Juvenile Defenders office with the Shelby County Public Defenders office within the next year.
Shelby County Commission chairman Mike Ritz quoted a figure of $4.5 million to $6.5 million a year “for the rest of our lives.”
Luttrell said there could be alternatives to the property tax rate absorbing all of the increased costs of both items.
“Rest assured that before we propose any increase in our property tax, we are going to make sure that we have tried every other option from the standpoint of how we can be more efficient in government, how we can streamline services in government and what are our real priorities.”
A countywide sales tax hike Ritz and Luttrell favored but parted coming on over the timing, was voted down in the November elections, which means it can’t go back on the ballot for another year.
The half-cent on the county sales tax rate would have raised an estimated $60 million in revenue annually with $30 million of that going to education.
Ritz favored the ballot initiative saying the funding was going to be needed no matter what operating budget eventually emerges for the consolidated school district.
Luttrell opposed the timing of the ballot question, saying voters would not approve it without first seeing a school system budget proposal.
As Luttrell weighs the size and impact of a possible county property tax hike, Memphis City Council members are weighing a roll back of the $3.11 city property tax rate, in part because of the end of city funding for public schools.
The council could vote as early as next month on a citywide half-cent sales tax hike. That hike, if approved by voters in a May special election referendum, would raise an estimated $47 million in revenue for the city. Of that, $27 million would be used to fund early childhood education programs independent of the consolidated school system and put in a trust fund. The remaining $20 million would be used to drop the city property tax rate by 20 cents.
In his remarks Tuesday, Luttrell also talked about an erosion in support of public health programs.
The Memphis-Shelby County Health Department became the sole funding responsibility of Shelby County government when the Memphis City Council voted several years ago to withdraw city funding of the agency.
Since then, Luttrell noted the funding for what is now a division of county government has been sustained by grants.
“In other words, the grants that we could get determined the priorities of our division services,” he told the group of human resource professionals. “Folks, this is exactly backwards.”