City, county discuss sales tax hike
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That was good news to city leaders after meeting with county officials Tuesday because if a sales tax increase is ultimately approved by county voters, that new revenue would provide additional funds to both city and county coffers.
The potential for new sales tax revenue would allow the city to bring the property tax inside the city limits, which has been recommended to be increased by 11 cents, back down to its current level of $1.94 or even below that, McMinnville Vice Mayor Patti Nunley said.
“The intent is to lower it, but by how much, I don’t know, depending upon the timing of the election,” she said Thursday after city officials spent hours Monday and Tuesday discussing budget options for the 2003-2004 fiscal year.
Nunley reiterated the need for new revenue by stating the city is suffering the consequences of losing about $115,000 in state-shared taxes this year.
County officials have wrangled with their own proposal for a property tax increase in recent weeks, but a straw vote taken at a Warren County Commission meeting Monday indicated most are not in favor of it.
City leaders invited the county’s Budget and Finance Committee to city hall Tuesday to gauge responses to banding together to support a local option sales tax proposal county-wide. While initially shying away from the proposal, several commissioners said they would be willing to support the idea.
Commissioners present Tuesday seemed receptive to the sales tax proposal that has been presented by McMinnville Alderman Bobby Kirby. The proposal is to provide for a county vote to increase the local option sales tax by 3/4 of a cent, which would make the sales tax on most items 9.75 percent county-wide, the maximum allowed by state law.
Among the ideas Kirby expressed were:
• Obtaining a contract between the city and the county to ensure the 1969 local option tax of 1 percent remains used for school purposes.
• Allowing the city to receive half of 1/2 percent of the local tax enacted in 1985.
• Proposing the city and county join together to support a referendum to increase the local option tax by 3/4 of a cent and share the tax, as well as hold a county-wide referendum with support from all local governments.
Kirby said he was advised by the state’s fiscal services department the 3/4-cent increase would generate the county about $2.1 million. If Kirby’s proposals as listed above were approved, he said new revenue to the county would be projected at $592,000, with most of that going to schools, while McMinnville would gain about $1.5 million.
Centertown would get about $170; Morrison, about $27,000 and Viola, about $1,600, he added. City Administrator Herb Llewellyn, who deals with budget issues daily, confirmed those estimates as accurate.
County officials said they would like to also see the dual fee structure – which assesses higher fees to non-city residents using the Civic Center than it does for city residents – dropped.
Although several ideas have been tossed around, a number of formalities must occur before a sales tax increase, a city property tax increase or a reduction are possible.
Nunley said the Board of Mayor and Aldermen will consider the city budget on first reading this Monday, which reflects an 11-cent property tax increase recommended in committee earlier this week, as well as move forward on legal procedures to make a county-wide sales tax referendum possible.