Committee declines to recommend sharing tax

Sunday, May 27, 2007

Three municipalities in Marshall County asked a committee of county commissioners on Wednesday evening to recommend revenue sharing from the county's adequate facilities tax and the committee declined to vote on the request.

Miffed by the lack of action, Lewisburg Water and Sewer Department Director Larry Jones said that leaves the city, Chapel Hill and Cornersville with the option of taking the question to voters through a referendum that could be put on the ballot by circulating a petition.

The adequate facilities tax raises $291,000 per year, according to numbers released by Commissioner Seth Warf, a member of the county's codes committee.

Committee Chairman Richard Medley said municipalities could have imposed their own tax per square foot of new construction, but didn't.

"Our predecessors [on the county commission] fought the fight to impose this tax," Medley said. "Whether you are in or out of a municipality, this tax affects you."

Adequate facilities taxes typically are imposed as a way to make growth pay for itself. Discussion among codes committee members showed Marshall County's revenue from this source is spent to retire debt on capital projects and to extend water lines by the county utility.

Nearly three quarters of the annual revenue from the tax is a result of payments with building permits issued for construction beyond city limits. About a fifth of the revenue, or $56,000, is from construction in Lewisburg. Construction in Chapel Hill generates nearly $9,200, or 3 percent of the total. The county tax raises about $1,800 from new construction in Cornersville. That's .6 percent of all the adequate facilities taxes collected in a year.

Cornersville's budget is about $500,000. Lewisburg's budget is expected to be about $10 million. Chapel Hill's budget is approaching $1.26 million without the town's water and sewer service, according to Town Administrator Mike Hatten.

Hatten quoted figures from fiscal year 2005-06 showing that year's total revenue from the adequate facilities tax. The information from Hatten shows the county collected a total of $378,366 in adequate facilities taxes during that fiscal year. Some $35,000 of it was from the tax on construction in Chapel Hill. The tax raised about $85,000 from construction in Lewisburg. About $2,000 of that tax revenue was paid on construction in Cornersville.

"Much of the burden of growth and the costs of new and expanded public facilities falls upon the municipalities where the development occurs," according to a resolution from the Lewisburg City Council. "It is only fair … that a portion of the adequate facilities tax be shared among Marshall County and the municipalities."

The resolution, and similar statements from Chapel Hill and Cornersville, asks county commissioners to "share a pro rata portion of the … tax with the municipalities…"

When told that city leaders were thinking about circulating a petition for a referendum to force the county to share revenue from that tax, codes committee members replied that any county commissioner could be asked to sponsor the request and file their own resolution. However, that resolution would be too late for the commission meeting on Tuesday.

Such a resolution would have to be considered by other committees before the commission met in June if that's when the municipal leaders wanted consideration of the request.

Getting the question on a ballot wouldn't be too hard, Jones and his assistant director, Kenneth Carr, said. Signatures from perhaps five percent of the registered voters in the municipalities might be enough, they said, indicating they wanted to double check the percentage with the election office where they felt sure they'd find voter registration is low.

While that's an unresolved issue for those who might want to call a referendum, commissioners on the codes committee commented about the discussion during their meeting.

"Cities needed to hear developers say they don't want to pay more," Commissioner Jennifer Harris said.

Developer Todd Warner said home construction is the economic engine that drives other businesses. It's a position taken by state homebuilders association leaders. Homebuyers also spend money on appliances, furniture, lawn care products and a host of other things and sales taxes are paid on those purchases.

Furthermore, other nearby counties and their cities charge development taxes and those are passed on to the homebuyers, thereby raising the cost of new homes, Warner said. Maintaining a low tax here keeps Marshall County homes competitive.

Warner and other developers expressed concern that splitting the revenue with the municipalities would lead to a tax hike.

"We were glad to hear opposing views," Harris said.

"Being a new commissioner," Warf said, "and this being a [tax] resolution passed before my time, I think we have a commitment to fund … debt. If we gave them that, we'd not have that tax to pay debt."

He and other commissioners also noted that county commissioners support a program to extend water lines to rural residents and the county utility's construction project is funded, in part, with revenue from the adequate facilities tax.

Committee Chairman Medley said, "My recommendation to the committee was to take into consideration all the comments from those who came forward… There was no action taken on their request to receive a portion of the adequate facilities tax."