To some it’s a calculation with no binding effect on what is to come. To others on the Shelby County Commission it is an indication that a county property tax increase is about to be railroaded through.
The certified county property tax rate of $4.32 approved Monday, May 20, by the commission is an indication that the annual county budget season is reaching its end game.
The commission’s debate over the action and the 8-3 vote is an indication of the discussion to come once the commission moves to set the Shelby County property tax rate next month.
The recertified rate is simply a calculation of what tax rate produces the same amount of revenue for the county in the wake of the 2013 property reappraisal process, said Kim Hackney, the assistant county chief administrative officer.
“You are just acknowledging that is what it would take to produce the same amount of revenue,” she said.
The state law requiring it was passed with the intent of preventing local governments from keeping the property tax rate the same and generating a windfall in revenue because of what is normally some kind of growth in property values in the reappraisal process.
But the 2013 reappraisal in Shelby County is the first in anyone’s memory in which the revenue amount has dropped.
Commissioner Wyatt Bunker questioned whether the intent of state law was for there to be a recertified rate in such an instance.
Shelby County attorney Kelly Rayne said the state law doesn’t say the rate is recertified just to prevent a revenue windfall.
“There are no limitations on it, whether it’s more revenue or less revenue,” Rayne said. “There are no exclusions on that.”
Commissioner Terry Roland called it “lawyer talk” and said the higher recertified rate is a way to automatically start with what he considers a tax hike and not just an increase in the tax rate.
“It’s a way to put us behind the eight-ball up here,” Roland said of Shelby County Mayor Mark Luttrell and his administration. “And then next time an election comes they’ll say the commission went up on your taxes when in fact it’s the mayor that’s making these decisions.”
Roland said any adjustment up on the tax rate from the existing $4.02 rate is what he considers to be a tax hike. He said the commission should cut county expenses to keep the tax rate at the current setting and govern with less revenue.
Last week, Luttrell revised the appeals allowance downward making the estimate for the recertified rate 30 cents more on the $4.02 rate instead of the previous estimate of 33 cents.
Luttrell proposed a 6-cent tax hike on top of that for the consolidated school district. Combined with an $11.6 million boost in revenue projections from the 3-cent difference, Luttrell has a funding package for the school system of $20 million.
Luttrell said Monday that the state law is “confusing” but he also said state law makes a clear distinction and that the recertified rate is “simply a calculation.”
Bunker and Roland aren’t alone in arguing that while the certified rate might produce the same amount of revenue overall for the county, it will mean a tax hike for some taxpayers even without the additional 6 cents.
Memphis City Council member Shea Flinn argued on the city side of the tax question that for commercial taxpayers in particular, they will pay more in taxes with the recertified city rate reflecting a similar drop in reappraisal values.
“It’s just hard for me to believe that we’re forced by the state to increase people’s taxes. And we are. You are looking at one right here,” Bunker said. “When we go to establish the tax rate – it will be so sorry, it’s $4.32. We’ve never done it this way. I’ve been here seven years.”
The commission votes on the second and third readings of a county property tax rate next month and Hackney said the commission’s deliberations on that will start with the existing tax rate of $4.02.
Commissioner Sidney Chism accused some on the body of trying to use the calculation to defeat the extra funding for the school system.
“We’ve got some of my colleagues that just don’t want to see the mayor succeed in raising the $20 million he needs from this commission … to get the school board the money it needs,” Chism said.
Commissioner Steve Basar was the middle ground.
“We are not voting on the tax rate that we will use to determine the taxes people are going to pay,” Basar said. “That doesn’t mean taxes are going up. That’s a totally different vote at another time.”