City may ask for another sales tax referendum
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Previously calling their action a “pre-emptive strike” against state budget proposals that could snatch funds from McMinnville as well as many other municipalities, city officials said Monday if they decide to move the process further and ask for a special election before the end of the state’s fiscal year, they will have to meet again this month to approve a resolution first.
The resolution would ask the election commission to set a special referendum with hopes city residents could decide the issue before July 1, which is the start of the state’s new fiscal year.
The impetus for that time frame revolves around state budget concerns. One concern is state officials could decide to implement a 3/4-cent expansion of sales tax on some items that would not be sent back to McMinnville.
Waiting longer could mean it would be too late for the city to reap the benefits of local tax changes if that option becomes reality, Mayor Royce Davenport said.
“We’re concerned that the state, in its search for additional revenues, may take this. They have the legal right to appropriate that 75 percent of 1 cent for their own use,” Davenport said. “And since we haven’t exercised it, they can do it at the state level, and we will still be paying the tax and it will be going to the state, not locally.”
A similar local option sales tax proposal was defeated in November, with 2,009 city voters saying “no” to increasing the tax from 2 percent to 2.75 percent, compared to 1,679 city voters who liked the idea.
While last year’s proposal was touted as a trade off between property and sales taxes, with officials saying increasing the sales tax could potentially yield almost $2 million to the city, this year’s circumstances are somewhat different, but there are similar refrains.
The potential to decrease property taxes still exists if a new local tax is approved, depending upon what is ultimately decided at the state level, but officials have said they are fearful of state government budget action that could impact the city’s bottom line.
“We only need a certain amount of money,” said Davenport. “And to us, whether it comes from property tax or the sales tax, is not the major factor. The matter is, we can do it and by balancing a little bit more on the sales tax, we can reduce it on the property tax and have the same amount of revenue.”
Convincing voters to raise the local tax will be an “uphill battle,” he said, if city officials request a referendum, especially since state action is unknown at this point.
Davenport added aldermen will be challenged with deciding whether the issue is worth the cost of the special election, which was $18,000 in January, 2001. He said there is always a possibility the process won’t move forward.
Members of the Board of Mayor and Aldermen voted 4-1 Monday to approve an ordinance on second reading setting the stage for an upcoming referendum, with Vice Mayor Patti Nunley voting “no.” Voting “yes” were aldermen Michael Chrisawn, Bobby Kirby, Jimmy Haley and Jimmy Bonner.