Shelby Commission Overrides Mayoral Veto; Tax To Be On Ballot

(Memphis) The Shelby County Commission has voted to overturn Mayor Mark Luttrell’s veto of a county tax referendum.

This means the voters will consider a half-percent sales tax increase on the November ballot.

If passed, the county-wide sales tax would go up to 9.75 percent. Tennessee state law does not allow the sales tax rate to go any higher.

For $100 worth of purchases, that would mean 50 cents more in taxes than what one is currently paying.

Citizens of Memphis, Millington and unincorporated Shelby County will get to vote on the issue.

Those living in other Shelby County suburbs have already passed their own half-percent sales tax increase to fund municipal schools. Memphis was in the process of having city voters consider the same increase in order to fight blight and lower property taxes; but if the county-wide tax passes, that will trump any city tax increase.

Mayor Luttrell vetoed the referendum saying it was premature. Since the measure is intended to generate funds for the merged school district, Luttrell said that he would like to see an official budget from the school board before determining if more taxes are necessary.

Commissioner Mike Ritz, however, said there isn’t time to wait.

“If we don`t do it now, the city puts the vote on in November and it goes through…then next year if we want to do it, first of all we’d have to wait two years to get the money then put the vote to just voters just in the unincorporated areas.”

Ritz meant that if the city of Memphis passes its own sales tax increase first, the county commission can only go to the remaining unincorporated Shelby County to ask for a county-wide increase.

There would also be a delay in generating funds, at a time when the Transition Planning Commission estimates a $57 million shortfall for the system.

Some Memphis voters are against the idea of more taxes, but given the reason, some are willing to go along with the increase.

“I’m glad to put a little bit more money into the coffers there. With [my daughter] growing up around here, it’s definitely going to have an impact. So I’d rather start now than later,” said David Kelly.

“No one likes taxes going up. So I’m always going to decline taxes,” said Sapana Budhraja.

But once Budhraja learned of a possible $57 million shortfall for the schools, she said sales tax is a reasonable place for politicians to turn.

“That’s where everyone goes to first. Ok, we have a problem here. What we need to do is raise sales taxes.”

If passed, half the revenue from the county-wide tax would go toward the new school district. The other half would be divided proportionally amongst the cities within Shelby County.

For some cities, that revenue would be less than what could be generated from each city’s own sales tax increase. For example, Memphis could have raised an estimated $47 million from its own sales tax increase. But getting a portion of the county-wide increase would result in only $27 million.