VOL. 132 | NO. 115 | Friday, June 9, 2017
Luttrell, Commission Working Out Details of 3-Cent Property Tax Cut
By Bill Dries
Shelby County Commissioners have talked for several years about cutting the county’s property tax rate. But it’s never been more than talk and never had close to the seven votes necessary to drop the tax rate.
So there was some surprise during committee sessions this week when commissioner Heidi Shafer’s proposal to drop the certified tax rate of $4.13 by 3 cents got six votes in budget committee.
The proposed $4.10 tax rate goes to the full commission Monday, June 12, for the first of three readings, with Shelby County Mayor Mark Luttrell saying he is willing to find a way to make it work.
“We can get there,” Luttrell said during a Thursday, June 8, taping of “Behind the Headlines” that will air Friday on WKNO-TV. “That’s why I hope that over the next couple of weeks we can sit down and say, ‘OK, if we can’t cut it here, can we cut it over here?’”
Shafer said she is willing to talk about where to get the money.
“We have the highest cumulative tax rate in the state of Tennessee,” she said, referring to the city and county property tax rates paid by Memphis property owners. “If we are going to compete we’ve got to drive down our tax rate. I’m very open to how we get there. But I’m very much like a broken record that I think we absolutely need to do it.”
Commission budget committee chairman Steve Basar said the 3 cents on the tax rate that Luttrell’s proposed pay-as-you-go capital fund for construction projects and other one-time expenditures was the first thought for finding the $5.1 million that 3 cents on the tax rate would cost, with $1.7 million of revenue generated per penny.
“We had six votes,” he said of the committee recommendation, which is not binding on the full 13-member commission. “Everybody was saying they were going to abstain.”
The committee vote, while one vote short of the seven needed for passage, was somewhat surprising, but Basar said it is not a done deal. Last month, he didn’t count seven votes for the general idea of a tax cut, much less a 3-cent cut.
“The final vote on the tax rate won’t be until July,” he cautioned. “I think there’s a will on the body – at least six votes.”
“Behind the Headlines,” hosted by Eric Barnes, publisher of The Daily News, airs Friday, June 9, at 7 p.m. on WKNO-TV and can be viewed next week on The Daily News Video page, video.memphisdailynews.com
The existing county property tax rate is $4.37. With the 2017 countywide property reappraisal, the new certified tax rate approved by the state is $4.13. That is the tax rate the state and county agree will produce the same amount of revenue the county currently gets with the $4.37 rate, taking into account appeals of the values and other factors. The $4.10 proposal would reduce the tax rate further.
“I’ve been actively and like a broken record talking about the need for a tax decrease for the last seven years. I think it’s the right direction to go,” Shafer said. “We have actually been able to right ourselves. … Good fiscal management and oversight has led us to a place where we can start developing surpluses.”
Shafer said she wasn’t specifically targeting Luttrell’s plan to fund some capital projects with money set aside instead of bonds that incur debt for the county. And Luttrell says he wants to focus on other ways of finding the $5.1 million for the tax cut.
“There are still some questions that have to be answered about our budget as we are going forward. I’m a little bit concerned about how we got to the $4.10,” he said. “Essentially what we did is kind of create debt to pay down the tax rate with the money that we were hoping to really use for pay-as-you-go capital improvements. That seemed to be off the table at the time. I’m hoping we might be able to revisit that issue.”
If Luttrell’s pay-as-you-go fund is withdrawn this budget season to return another fiscal year, Shafer said she will probably still have some longer-term questions about the use of what amounts to money not needed to pay down debt. The county’s debt from borrowing to finance capital projects over many years is less than $1 billion for the first time in 18 years after peaking at $1.8 billion.
“We are in the enviable positon now of coming up fairly regularly with surpluses each year. With the property values finally rebounding from 2007-2008, we are going to be in a pretty good position,” she said. “My main concern with what the mayor is proposing is that the way that lined out is it would be collected specifically for (capital) dollars.
“I think it’s going to create a new mandatory restricted allocation for that. And I want a little more flexibility for that.”