Tax increase could be left up to voters
McMinnville officials said they want the people to decide on a proposal for a 3/4-cent local option sales tax increase in November elections after almost discarding the idea in committee Monday.
Members of the Finance Committee said they were pessimistic about a new tax passing even as they touted it as a possible way to reduce city property taxes.
The idea was to be tabled at one point in discussions. However, officials said it won’t cost the city any extra money to include it on the ballot within a regularly-scheduled election. Additionally, there is a pre-election deadline for calling a referendum, they noted.
Finance Committee Chairman Vice Mayor Billy Wood said the idea is to ask the people to approve the sales tax increase, which would specifically benefit city coffers as presently proposed. A new city sales tax would also allow officials to reduce the property tax rate later, which is currently $1.94, officials said.
According to City Administrator Herb Llewellyn, about $2 million would be generated by the sales tax proposal, which could offset the estimated $3 million in current property taxes collected annually in the city.
Officials said they would like to include wording on the November ballot that would make a promise to reduce the property tax, but said that wording is not possible due to state laws defining how a ballot question is worded.
“What I wanted the thing to say on the referendum was if you voted yes to increase the sales tax by 3/4-cent, then the city would automatically reduce the property tax by $1.16, but [City Attorney James Dempster] says we can’t word it that way,” Wood said.
Alderman Rickey Minton noted news of the city’s local option sales tax increase proposal has not gone over well, while Mayor Royce Davenport said some have mentioned trusting government to reduce the rate later if a sales tax increase passed in November.
“I have yet to talk to anyone in over two minutes that I couldn’t explain this to them and them think it’s the greatest thing in the world,” Minton said of the proposal.
“But when the article came out about a month ago,” he added of reactions to the news, “I had a bunch of people just completely bent out of shape – ‘Here you go, raising our taxes again!’ The only thing they read was that we were raising their taxes.
“I’ve got to go, ‘Did you read a little further and see that we may be raising one but we’re cutting another one?’ and they go, ‘No, what are you talking about?’ The only thing they saw was that we’re raising the taxes.”
In spite of the perceived public objections and officials’ concerns it wouldn’t pass, Wood and Minton said they thought it would be a good idea to present it.
“You let people who come in from out of town pay the property taxes for our citizens, which is a good thing,” Wood added.
Alderman Patti Nunley, also a member of the Finance Committee, didn’t agree and said she believes the sales tax is “the most punishing” tax available when one considers the elderly.
Finance Committee members also debated a gas tax levy, touting it as an additional measure that could further offset the property tax rate, but dropped the issue.
After the local option sales tax idea was recommended to the full board by committee members, members of the Board of Mayor and Aldermen unanimously approved a resolution to proceed with calling a referendum.
The resolution only authorizes the city to proceed with formal steps to call for a referendum levying an additional 3/4-cent local option sales tax.
Election Administrator Donna Yates said city officials contacted her Tuesday and were seeking legal advice on how to proceed. Yates said the city needs to provide documentation to the election commission by Sept. 6 that directs it to call for a referendum placing the issue on the November ballot.