Shelby County Mayor Mark Luttrell is proposing a $4.38 county property tax rate including a 6-cent tax hike above the higher certified tax rate for the new fiscal year that begins July 1.
That, along with several other fiscal moves, would give the consolidated school system the nearly $35 million in extra funding in the school system’s still-tentative budget.
Luttrell presented his proposal to Shelby County Commissioners Wednesday, May 15, during committee sessions.
The other elements of the proposal include increased revenue projections for the new fiscal year of $11.6 million. The new revenue projections mean producing the same amount of revenue for county government after the 2013 property reappraisal will take about 3 cents off the 33 cents on the property tax rate that Luttrell and commissioners originally estimated.
The administration, working with Shelby County Trustee David Lenoir and Shelby County Assessor Cheyenne Johnson, brought down the certified tax rate based on a normal 93 percent collection rate by the Trustee’s office in the first year after a reappraisal.
“We could have provided for an appeals allowance of 3.4 percent and the state would have been happy,” said county finance director Mike Swift. “But we felt it was overstated and we would get a windfall.”
The purpose in state law of the certified tax rate is to guard against a windfall in revenue in which the property tax rate remains the same even if reappraisal values overall have gone up and the same property tax rate would then produce more revenue for a local government.
In the case of the 2013 reappraisal, property values dropped overall, leading for the first time in the memory of those in local governments to an existing property tax rate creating less revenue than it did before the reappraisal.
Working with Johnson, Swift and the Luttrell administration revised the appeals allowance to 2.7 percent.
“We think that is very realistic and fair and gives us a good certified tax rate,” Swift said.
That 93 percent with a certified tax rate of $4.32 came to $695 million in revenue in the revised numbers, the same amount of revenue the county gets with the current $4.02 tax rate. The upward revenue estimate on a lower certified rate based on a lower appeals allowance leaves $11.6 million in extra revenue not included in Luttrell’s original budget proposal.
Luttrell proposed Wednesday that the extra $11.6 million in county revenue projected go to the schools budget. And another $10 million from a 6-cent increase on the property tax rate above the estimated recertified tax rate would also go to the schools.
Luttrell is also advocating that the school board approve $5 million to $7 million from its reserves funds for most of the rest.
Passage of the bundle of interlocking financial moves is by no means guaranteed based on reaction from commissioners in Wednesday’s committee session.
The rate with the tax rate hike and the tax hike for a total rate of $4.38 is below the 10 percent level that would require a two-thirds or nine-vote majority on the 13-member County Commission.
Commission Chairman Mike Ritz has said, and Luttrell has concurred, that there probably are not the required nine votes on the commission for that kind of tax hike.
Commissioner Wyatt Bunker argued the schools funding package is bad strategy for a school system he still believes is top heavy with administration.
“You’re showing your hand before the school system or anyone has ever presented to us,” Bunker said. “The school system still needs to justify their budget. If you lay aside $20 million for schools and the school system hasn’t even come up here, they pretty much know what figure they’ve got to get to.”
Luttrell made much the same point last year in his opposition to a countywide sales tax hike ballot question that was defeated. He argued the school board had not made its case for more funding.
“We’re not suggesting setting it aside,” Luttrell told Bunker Wednesday. “Like you, I am waiting to see their budget. … What we’re suggesting today is a scenario to raise $20 million with some sacrifices on the part of the school system to come up with the additional $15 million.”
Other commissioners opposed any increase in the $4.02 rate. Meanwhile, Commissioner Walter Bailey proposed a 2 percent pay increase for all Shelby County employees. Luttrell’s budget proposal includes no pay raise for county employees.