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VOL. 124 | NO. 46 | Monday, March 9, 2009

Tax Questions Arise During School Funding Talks

By Bill Dries

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Making Shelby County government the single source of funding for the city and county public school systems could mean a 53-cent increase in the county property tax rate over several fiscal years. It would also reduce the city property tax rate by 82 cents.

Giving the city and county school boards the authority to levy taxes and have the state Legislature approve a separate tax rate could double the $2.02 part of the county property tax rate that now goes to both school systems.

Both scenarios are estimates by Shelby County Board of Commissioners member Mike Ritz. Ritz called late last week for an ad hoc committee on education funding to verify his estimates and come up with one set of figures that accurately portray the bottom line of two proposals to change the way the two school systems are funded by local government.

“We are dealing with staggering amounts of money,” Ritz said as he called for “full-time big-league financial people to get us one set of numbers.”

The mother lode

Ritz’s higher tax rate estimate for a single-source funding district was based on the cost of the two school systems assuming costs associated with Other Post Employment Benefits, a recent federal mandate on how such benefits are financed by local government entities. With a district, Ritz assumed the two school systems would be responsible for OPEB costs Shelby County government now funds.

Some legal opinions from various sources are also on the way for the March 21 meeting of the ad hoc committee.

A two-hour session of the committee Thursday demonstrated how fluid even the most basic parts of the two proposals have become.

Both school boards back a single-source funding district that would give the combined boards of education the authority to meet together to levy taxes to fund their respective budgets.

They’ve even submitted legislation in Nashville that originally included a pair of referenda – one in the city and one in the the county outside Memphis. The district would have to win approval by a majority vote in each referendum to become a reality.

But the legislation as it is currently worded refers only to a single countywide referendum and it says that such a referendum would be non-binding.

The ties that bind

Shelby County Schools attorney Valerie Speakman said the language was changed based on a legal opinion from the Tennessee attorney general’s office that only the Legislature can delegate taxing authority.

Memphis City Council chairman Myron Lowery, though, said the City Council has had vast experience with other legal opinions that forbid the use of advisory or non-binding referenda as a straw poll of sorts to gauge public opinion. They are either binding or they can’t be held.

Still, other panel members said their support of the funding district was contingent on it having to win approval from voters.

Memphis school board president Tomeka Hart described herself as a “late supporter” of the district. She said her conversion was based largely on the referendum requirement.

“I’m a little wary if the vote is against (the district) … but it doesn’t stop it from happening,” Hart said.

County Commissioner Mike Carpenter also questioned whether a move to a funding district could be stopped in the Legislature if there was a referendum and the idea was rejected by voters.

Memphis school board member Jeff Warren said he was confident a legislator would torpedo the measure if that were the case.

“I think that just the political reality of having a referendum in which the voters say no means it’s a dead issue. It takes one legislator to stop it,” Warren said. “We’re OK here. … I don’t think anybody would have the political will or power to try to go against a voter referendum.”

The remark caused several panel members to laugh aloud.

Funny business

Memphis City Council member Harold Collins argued there were two many “what ifs” to keep pursing the funding district and that a plan to simply make Shelby County government the single source of funding for both school systems should become the “overriding plan.”

The plan Collins favors would not require a public referendum. A referendum would be unconstitutional, according to the county attorney’s office, because county government cannot delegate that decision to the public or any other entity.

But Shelby County school board chairman David Pickler said that plan, known as Plan B, has undergone far less scrutiny than the funding district proposal he’s been shepherding.

“I think that there still is a burden of proof related to Plan B on whether or not there are going to be any financial benefits to county residents who live outside the city of Memphis as they are anticipating what could be a very large tax increase,” he said.

Four of the six suburban mayors also attended the session.

“Collierville – we have excellent schools and I know we are very fortunate,” said Collierville Mayor Stan Joyner. “But just kind of first blush looking at these numbers, I’m thinking why would I vote for this? Why would the residents of Collierville vote for this?”

Bartlett Mayor Keith McDonald said just the idea of a $4.04 education tax rate could cause a taxpayer “revolt.” He also reacted to the overall question of making education funding equitable or whether such funding should be equal.

“It’s very important that the people I represent … get equal funding,” McDonald said. “I believe there is a constitutional responsibility for equal funding.”

Germantown Mayor Sharon Goldsworthy told the panel, “I think you will find suburban communities pretty much of a like mind.”

“I think what’s really been missing here is sharing this information and understanding that this is kind of a moving target,” Goldsworthy said. “What is clearly absent from this whole discussion is any awareness out in the larger community that we’re really even talking about this. … It is incumbent on us as public officials to be helping our communities … understand these discussions.”

Millington Mayor Richard Hodges told the ad hoc committee he agreed with the other mayors.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 133 1,342
MORTGAGES 0 131 1,047
FORECLOSURE NOTICES 0 19 170
BUILDING PERMITS 28 305 3,056
BANKRUPTCIES 25 98 716
BUSINESS LICENSES 4 26 302
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0