City Sales Tax Hike Proposal Resurfaces

By Bill Dries

Two months after voters – most of them Memphians – rejected a countywide sales tax hike, there is a new proposal for a citywide sales tax hike to go on the ballot later this year in a special election.

FLINN

Memphis City Council members Shea Flinn and Jim Strickland have revived the proposal. The council discussed it Tuesday, Jan. 8, in a council committee session.

STRICKLAND

Revenue from the half percent sales tax hike, an estimated $47 million a year, would be used to fund an expansion of pre-kindergarten programs in the city as well as allow the council to roll back the city’s property tax rate.

The goal is $27 million a year in revenue to go in a pre-kindergarten trust fund governed by an “early childhood commission.” The funding would expand pre-kindergarten services in Memphis outside the consolidated public school system to come in August.

And the property tax rate would be rolled back from $3.11 to $2.91 with the remaining $20 million in sales tax revenue.

“We have to start making bold changes in our community,” Flinn said. “We have to make game-changing moves to move our community forward.”

Flinn said by not relying on a school board vote for a specific use of the revenue pledged for pre-kindergarten, the revived citywide tax hike avoids a major flaw that he believes led voters to reject the countywide property tax hike in November.

“There is no school board vote required,” he said. “The funding body is the city. We are the funding body for the city so what we say goes.”

Strickland said he favors the half percent sales tax hike in the city because the council is not asking taxpayers to help the city balance its budget but is proposing new uses for new money and reducing the property tax rate.

“The public will not and should not help us balance the budget with new taxes,” he argued. “In a political life, we are given only so many chances to make substantial change.”

But council member Kemp Conrad said the proposal is an “irresponsible” way to cut the property tax rate because it amounts to cutting the tax rate but “backfilling it with more city government, more cost” in future years.

“I’d rather keep the tax rate flat and have a responsible government than reduce taxes, cut pay consistently to public safety personnel, not fund the pension plan, not fund what we promised the retirees,” Conrad said. “I think that is irresponsible.”

Flinn proposed a half-cent citywide sales tax hike in 2012 and the council acted to put the measure on the November ballot. Then the Shelby County Commission approved a countywide sales tax referendum that legally trumped the city effort.

Flinn points out that the county government move to the ballot means the council does not have to start all over in its move to a special election probably sometime in May. The earlier council action was held in abeyance for six months by the county action or put on hold. The council could reactivate it with a single vote and a new referendum date.

Flinn and Strickland intend to have more discussion in committee on Jan. 22 and bring some resolution to the council at the first council meeting in February at the earliest.

The November referendum among city of Memphis voters and those voters living in unincorporated Shelby County was no contest. It was easily defeated by voters who turned out in large numbers for the presidential general election that topped the ballot and draws the largest voter turnout of any election cycle.

The sales tax hike was also coupled on the November ballot with a one-cent Memphis gasoline tax to fund the Memphis Area Transit Authority. It too was crushed by Memphis voters.

Half of the revenue from the sales tax hike proposed then was to go to education with much of the campaign for the tax hike built around it possibly being used for pre-kindergarten expansion but going generally to the countywide school system that begins in August. Critics campaigned against it saying the possibility wasn’t a promise because the countywide school board had not committed to specifically use the money for pre-kindergarten expansion.

A 2013 Memphis referendum would require a special election because there are no regularly scheduled elections in Memphis during the year.