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VOL. 127 | NO. 182 | Tuesday, September 18, 2012

City Could Back Countywide Sales Tax Hike

By Bill Dries

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Shelby County Commission chairman Mike Ritz has been talking with some city of Memphis leaders about their opposition to the countywide sales tax hike he proposed for the Nov. 6 ballot.

The talks involve those city leaders supporting the countywide sales tax hike that pre-empted plans from City Hall for a citywide half-percent sales tax hike. The citywide sales tax hike would have been used to roll back the city’s property tax rate.

Interviewed on the WKNO-TV program “Behind The Headlines,” Ritz said if the countywide sales tax hike loses at the polls in November, Memphis leaders may not follow up with a quick move to the ballot for a citywide sales tax hike as previously had been thought.

“I am not real concerned – I was a week ago – that the City Council would then quickly try to go in and do their tax thing,” Ritz said. “I think they now realize that it is an incredibly uphill battle to get a special election only for the city sales tax hike.”

“Behind The Headlines” can be seen on The Daily News Online, www.memphisdailynews.com.

The city still gets a share of the estimated $60.6 million in revenue that would be created by a countywide sales tax hike. But it would be less than the $47 million in revenue from a city of Memphis-only sales tax hike that had been on the November ballot. By state law, half of the revenue – or $30 million – would go to the merged schools system as well as suburban municipal school districts being formed.

Memphis Mayor A C Wharton Jr. was among those trying to convince County Commission members in August to vote against overriding County Mayor Mark Luttrell’s veto of the resolution putting the countywide tax hike on the November ballot.

Wharton talked last month of using 40 percent of the revenue from the citywide sales tax hike to cut the city property tax rate.

“Now that we get to the point where we can get some breathing room for the property taxpayers – boom – somebody comes in and pulls the rug from under us,” Wharton said at the time.

The commission overrode the veto and Ritz believes the countywide question won’t be a “slam dunk” but will pass.

But County Commissioner Heidi Shafer, who was among those voting against the veto override, believes voters will not approve the sales tax hike. She says a tax hike now would mean no political pressure on the countywide school board to make tough decisions like closing schools and outsourcing custodial and transportation services.

“The voters in the city of Memphis voted overwhelmingly to get out of the school business and they don’t want their taxes to go for this from the city or from the county,” she said on “Behind The Headlines.” “What I want to do is send a message that we are no longer going to be allocating monies without performance. I want real numbers in front of me before I allocate dollars.”

Ritz argues the new merged school system to come next August has at least a $57 million gap between revenues and expenses and with no city government funding, county government is the place that funding has to come from. Half of the $60.6 million in revenue from a countywide sales tax hike would go to the merged school system and municipal school districts.

“We’re talking about the school board as if they were first graders. They understand exactly what their responsibility is,” Ritz said. “Are there savings? That is an argument that will go on in time forever. This is a peculiar circumstance, a peculiar time. Shelby County has never been in this position before.”

Later, Shafer questioned the timing of the move to the ballot for the countywide sales tax hike. She says it may have been timed to specifically exclude the county’s six suburban towns and cites.

The six towns and cities voted on half-cent sales tax hikes in August to fund municipal school districts.

An earlier countywide sales tax hike referendum before or at the same time as the suburban ballot questions on a sales tax hike would have included the six suburban towns and cities. Since suburban voters have already voted, the Nov. 6 referendum will be among voters in Memphis and the unincorporated areas of Shelby County as well as Millington.

In Millington, the sales tax hike within that city failed in August by three votes. The city of Millington is contesting the results in a Chancery Court lawsuit scheduled to be heard next month.

Ritz counters that Arlington and Lakeland school districts would actually get more revenue from a countywide sales tax hike than they would from their own sales tax hikes. However, Germantown, Bartlett and Collierville would see less sales tax revenue if a countywide sales tax hike is approved by voters.

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