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VOL. 133 | NO. 84 | Thursday, April 26, 2018

Strickland Proposes Lower Property Tax Rate

By Bill Dries

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Memphis Mayor Jim Strickland is proposing a change in the city property tax rate from the current $3.27 to a $3.19 rate as part of his third budget proposal.

The lower rate is to compensate for the surplus city and county governments have projected for the June 30 end of the current fiscal year because of a lower number of appeals of reappraisal values on property countywide last year.

The state approved a certified tax rate of $3.27 proposed by Strickland and approved by the Memphis City Council a year ago on the basis that it would produce the same amount of revenue as the previous tax rate after taking into account the 2017 reappraisal of property by the Shelby County Assessor’s office.

Jim Strickland

The reappraisal is done every four years and by state law must produce the same amount of revenue as before the reappraisal.

“We expected a normal number of appeals of those valuations,” Strickland said in his annual budget address Tuesday, April 24, to the council. “But now that those numbers have come in, we’ve learned that the appeals were way below normal.”

Strickland considered several options, including keeping the $3.27 property tax rate and the $8 million in new revenue it represents.

“Population loss remains our number one challenge and I believe that our tax rate, which is easily the highest in the state, is a reason why,” Strickland said in his speech. “So I’ve made a decision not to propose a tax increase and to continue to run the most efficient government we can possibly run.”

Some past windfalls have been kept by city and county leaders by keeping the property tax rate the same, citing economic uncertainties.

“I thought long and hard about trying to keep the tax rate where it was, but that honestly would have been a tax increase,” Strickland said after his budget address. “Our tax rate is so much higher than any of our sister cities in the state. And if you combine the city-county tax rate for Memphians, it’s 60 percent or so more than the rate in Nashville.”

The council will set the city property tax rate as it approves and possibly amends the operating and capital budget proposals Strickland submitted Tuesday.

“If the council wants to move it from there up or down, that’s their vote,” Strickland said of the city tax rate.

His $685.3 million operating budget proposal anticipates revenue growth of $10.1 million, not counting the $8 million windfall from the $3.27 city property tax rate.

Strickland is proposing $2.4 million of the revenue growth in the new fiscal year for the city’s annual required contribution to the pension fund. Another $1.8 million is for promotional testing in the police and fire departments. And $1. 5 million would go toward either two large police recruit classes or three mid-sized police recruit classes. And there would be an additional $1.3 million in funding for parks programming.

Strickland is not proposing any across-the-board pay hikes for city employees despite a call by the police and fire union for pay raises.

Both unions are also mounting a petition drive to put a ballot question to city voters this year to increase the city sales tax by half a cent with revenue going to such a pay raise.

Strickland said police and firefighters have had 6 percent to 7.7 percent combined pay raises since he took office in January 2016. He is instead proposing $1.4 million for targeted pay raises based on a market study.

The capital budget – one time spending for construction and similar projects usually funded by bonds – totals $85.6 million. The budget includes $19 million in funding for street paving.

City council budget committee chairman Edmund Ford Jr. says his goal in budget hearings that begin next month is to have final votes on the budgets and tax rates at the June 5 council meeting.

The property tax rate windfall from the 2017 reappraisal is an issue Shelby County government will also deal with during its budget season.

Shelby County Mayor Mark Luttrell is scheduled to deliver his budget proposal to Shelby County commissioners May 9.

Luttrell estimates the county will have an $18 million to $25 million surplus at the end of the current fiscal year because of the lower number of property value appeals than expected. Several commissioners have said they will propose a new, lower tax rate than the current $4.11 county property tax rate.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 133 1,342
MORTGAGES 0 131 1,047
FORECLOSURE NOTICES 0 19 170
BUILDING PERMITS 0 305 3,056
BANKRUPTCIES 20 118 736
BUSINESS LICENSES 27 53 329
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0