Sales tax hike going to voters

Wednesday, April 28, 2010
Commissioner Jimmy Stitt asks about a proposed sales tax hike.

Voting 15-3 Monday, Marshall County commissioners are asking election commissioners to put a sales tax hike question on the Aug. 5 ballot "if possible."

Voters in the county's general election would be asked whether or not the local option sales tax rate should be increased by half a penny, raising the tax from 9-1/4 cents per dollar to 9-3/4 cents.

The question for the ballot is whether the sales tax rate in Marshall County should go up by half a penny. Commissioners said it's not a referendum. It's a ratification of the commission vote. As of early Tuesday afternoon, no special election commission meeting had been called. At their April 20 meeting, election commissioners agreed to meet on June 1, but allowed that they might meet earlier, perhaps May 19, if needed.

Because the county's Budget Committee deals with financial matters, Commissioner Mickey King, chairman of that committee, called for adoption of a referendum asking election commissioners to include the question on a ballot. Commissioner Mary Ann Neill seconded the motion, saying it could be on the August ballot. That's possible despite others' anticipation that the vote would be in November.

"Could we amend it to be on the August ballot?" Commissioner Rocky Bowden asked. Ultimately, the resolution was changed to indicate a preference by county commissioners so the Election Commission might take that into consideration.

Holding the sales-tax vote sooner would start collections of the increased sales tax earlier, making more of it available for the fiscal year that starts on July 1.

Some officials close to the budget process say it takes about 90 days to start collections and get money into the county treasury.

Commissioners tried to anticipate how a property tax rate hike might impact the property tax rate and while there are mathematical calculations that can be applied, there's no certain answer.

A chief concern is rooted in agreements between local governments years ago to split sales tax revenue so a significant portion automatically goes for spending on schools. That raised questions about whether the sales tax rate hike would create a windfall of money for education.

King said it would not.

"What the school system gets from this body is what they get," the Budget Committee chairman said.

Discussion heard Monday night indicates that while increased sales tax revenue must go to the school system, the commissioners could cut the amount of funding to schools from the property tax rate.

Bowden's motion to, effectively, ask election commissioners to schedule the tax hike vote on Aug. 5 was adopted by a unanimous vote of 18-0.

The 15-3 vote to adopt the amended resolution to raise the sales tax revealed Commissioners Billy Spivey, Scottie Poarch and Seth Warf voting no.

Voting yes were Commissioners Phil Willis, Wilford "Spider" Wentzel, Larry McKnight, Richard Medley, Dean Delk, Neill, E.W. Hill, Bowden, Tony Williams, King, Jimmy Wolaver, Don Ledford, Tony White, Jimmy Stitt, and Reynelle Peacock Smith.

For months, Budget Committee meeting discussion has been approaching this juncture.

There has been a recurring concern that if local governments don't raise the local option sales tax rate, then revenue from the unused portion - what's between what's charged and what's allowed to be charged - could be taken by the state.

Consumers pay a total of 9-1/4 cents in sales taxes for every dollar spent in Marshall County. All but 2-1/4 cents on the current rate goes to the state. The 2.25 percent local option sales tax is capped at 2.75 percent.

Meanwhile, the state stops sales taxation on purchases such as boats and cars when the price exceeds $1,600, but local leaders have noticed state lawmakers might adjust that in a way to increase state revenue and possibly close that avenue for more local revenue. There's also been concern the state would take the rest of the local option sales tax because of state revenue shortfalls resulting from the economic recession.

Some local leaders have said that if the state is going to close that avenue for local revenue, then that revenue should be preserved for local government.

Recent sales tax revenue figures indicate the dollar amount from the half-cent sales tax rate hike would generate $1.2 million. If that money came from property taxes it would increase the county's $3.09 property tax rate by 12 cents, he said.