VOL. 129 | NO. 127 | Tuesday, July 1, 2014
Timing Key Element of County Tax Rate Debate
By Bill Dries
More funding from Shelby County government for prekindergarten classrooms is a matter of timing, say those on both sides of the property tax rate question on which the $2.8 million in additional funding hinges.
Shelby County commissioners are scheduled to take final votes July 7 on competing county property tax rate ordinances.
The version favored by county Mayor Mark Luttrell would take 1 cent off the property tax rate for city of Memphis property owners and 5 cents off for property owners outside the city of Memphis, including the extra 4 cents county taxpayers have been paying on rural school bonds used to build Arlington High School. The remaining debt would instead be paid with sales tax revenue from unincorporated Shelby County.
Commissioner Steve Mulroy is the sponsor of the plan to keep the 4 cents on the property tax rate outside of Memphis and instead use the $2.8 million in sales tax revenue in unincorporated Shelby County to fund prekindergarten classrooms.
“We’ve been talking about pre-K for the last four or five years,” Mulroy said on the WKNO-TV program “Behind The Headlines.” “Everyone’s always got good reasons why we should increase funding for pre-K at some undefined time in the future, never now.”
But county Chief Administrative Officer Harvey Kennedy said the timing is not right with Shelby County Schools about to take over the federally funded contract for Head Start that county government once had, with the school system about to hire a subcontractor to provide the Head Start services.
“There’s an awful lot on the plate. The Head Start program – a $25 million federally funded program that handles 3,200 kids at a maximum is something that is brand new to the county schools,” Kennedy said. “We believe it’s more important to stabilize the tax rate countywide.”
The program, hosted by Eric Barnes, publisher of The Daily News, can be seen on The Daily News Video page, video.memphisdailynews.com.
Mulroy is touting written guarantees from the Shelby County Schools board and schools superintendent Dorsey Hopson to use the additional funding for prekindergarten. Kennedy says it could obligate the county to continue providing the funding as part of the state law requiring a funding level known as the “maintenance of effort.” And Kennedy said the funding might require the county to come up with a proportionate share for suburban school districts.
Mulroy says Hopson and the school board would not count the funding toward the maintenance of effort amount and couldn’t under a state law that exempts funding for pre-K programs. And he has said the total amount would be divided with the suburbs.
“We don’t really have a good plan,” Kennedy said. “And we’re going to propose a different plan to perhaps set aside some funding in a different fashion during fiscal (year 2015) and perhaps bring a plan back to the commission sometime around the first of the year.”
Mulroy argues there is enough certainty now and that funding for pre-K is a better alternative to “subsidizing a tax cut for the suburbs.”
Mulroy is about to go off the commission after two terms and eight years on the body. Meanwhile, Commissioner Steve Basar, who is running for re-election this year, wants to see the tax rate drop more than 1 cent in future fiscal years.
“I think we are making a first important start here,” he said. “I think every year you are going to see a 4- to 6-cent reduction – at least that’s my goal to have a 4- to 6-cent reduction per year for the next four years.”
Kennedy isn’t so sure about something that aggressive. But he outlined a policy for dropping the county property tax rate by targeting the part that goes for debt service on the bonds that finance county capital spending.
“I hope he’s right. I hope we can lower them 4 to 6 cents,” Kennedy said of Basar’s plan. “But I’m not so sure that we can move them quite that quickly. What we are counting on – and I think if we will stick to the county’s fairly rigorous debt plan on capital spending – we continue to reduce spending and we take pennies off the tax rate by reducing the debt service payment, which doesn’t provide services. It doesn’t pay for anything except the borrowed money.”
Mulroy agrees that property taxes are too high but a function of the high level of poverty as well as separate city and county governments he termed a “patchwork quilt system.”
“We have a disproportionate amount of poverty and need in this particular community. It’s a structural problem that we’ve had for a long time,” Mulroy said. “It means the need for services is greater and the ability of people to pay is lower.”