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VOL. 128 | NO. 134 | Thursday, July 11, 2013

Tax Rate Delay Could Affect County Cash Flow

By Bill Dries

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Shelby County property taxes aren’t due until October, but the tax bills were to go out to taxpayers later this month.


And that could cause some cash flow problems if a new county property tax rate isn’t set soon.

Shelby County Trustee David Lenoir, whose office collects, accounts for and distributes the money for Shelby County government, says the first few months after the notices go out accounted for about $32 million in collections in 2012.

“Even though taxes aren’t due until October, we do have some folks who go ahead and pay in July, August and September to the tune of about $32 million last year,” Lenoir said, referring to property taxes – realty and personal.

“We’re 'anxious' is really the best word to describe our condition over here for them to get it set and let us know. We’re prepped and ready to send out notices. We’re just waiting on that tax rate number to drop in.”

–David Lenoir
Shelby County trustee

But that may be in jeopardy as county leaders ponder a next step after the Shelby County Commission voted down a $4.38 county property tax rate Monday, July 8.

The problem is the commission had already passed in June a county operating budget whose funding is based on the $4.38 tax rate.

County commissioners meet next on Wednesday, July 17, to discuss their options. Even if the budget committee recommends a course of action Wednesday and it goes to the full commission the following Monday, it will be mid-August at the earliest until the commission has a tax rate to go with the budget.

“Obviously not knowing when the rate is going to be set and when we can send notices out, I don’t know what the impact is going to be,” Lenoir said. “We’re anticipating unless they have specially called meetings, it won’t be set until mid-August.”

The problem isn’t the collection of the revenue. It is the flow of that revenue as Shelby County government begins to spend the money in keeping with the new budget.

“I won’t say 'behind' because we’ll eventually get the money collected, but we’ll dig ourselves into a real hole here for the first two months,” Lenoir cautioned. “We’re 'anxious' is really the best word to describe our condition over here for them to get it set and let us know. We’re prepped and ready to send out notices. We’re just waiting on that tax rate number to drop in.”

The commission’s decision on the $4.38 property tax rate began as a call by Commissioner Terry Roland to overhaul the budget. Voting down the tax rate following the earlier approval of the operating budget became the cause when the tax rate failed on the second of three readings but advanced to third reading.

And Roland’s questioning of whether commissioners Sidney Chism and Melvin Burgess had a conflict of interest because Chism owns a day care center and Burgess is employed by the consolidated school district was a factor in Chism deciding to recuse himself.

Burgess noted his employment by the school district in a disclaimer and voted for the $4.38 tax rate.

But the most critical factor may have been the decision by the commission to move ahead Monday on the same agenda with its scheduled election of a new chairman for a one-year term that starts Sept. 1.

The commission tried before the tax rate vote to elect a new chairman but moved it behind the tax rate vote after three rounds of voting produced no one with the seven votes needed to claim the chairmanship.

“There’s a lot of strategic voting going on,” commented Commissioner Steve Mulroy.

There were also a lot of caucuses among groups of two to four commissioners as the meeting continued.

Commissioner Walter Bailey complained that some on the body were linking the selection to the tax rate.

“We are dignified leaders of our community,” he added.

Roland was among those who favored the delay in the chairmanship balloting.

“That way we have a fair vote on chairman without the chairman as a bargaining chip,” he said. “You know things like that go on up here.”

Once the tax rate of $4.38 was rejected by the commission on a 5-7 vote, it took six more ballots before Commissioner James Harvey was elected chairman. Harvey and Commissioner Justin Ford were the two changed votes on the tax rate, voting no on third reading after having voted yes in the first two readings that were critical to the tax rate being voted down. And Ford was not seeking the chairmanship.

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