The Tennessee Conservative [By Paula Gomes] –
Local Tennessee mayors say it’s time for changes to be made to a 20 year old state tax policy that siphons off sales tax dollars raised in their communities. The state made the policy back in 2002 to offset a budget shortfall but city leaders think it’s time for those rules to be reversed so that local budgets can benefit from the $65 million a year that currently goes to the state.
Two bills are being considered by the Tennessee legislature that would end the 2002 tax policy.
House Bill 2562 (HB2562) sponsored by Representative Gary Hicks (R-Rogersville-District 9) and companion Senate Bill 2469 (SB2469) sponsored by Senator Bill Powers (R-Clarksville-District 22) as introduced, deletes the additional state tax of 2.75 percent applied to items between $1,600 and $3,200, and authorizes local governments to impose a local tax up to 2.75 percent on such amount, thereby returning those taxes back to local governments rather than the state.
House Bill 2012 (HB2012) sponsored by Representative Dale Carr (R-Sevierville-District 12) and companion Senate Bill 2076 (SB2076) sponsored by Senator Richard Briggs (R-Knoxville-District 7) reduces the share of state sales and use tax revenue deposited to the state general fund and increases the share appropriated to municipalities.
Some lawmakers are concerned that changing the way taxes are allocated could negatively affect the state’s budget. But according to reports from the State Department of Finance, Tennessee is currently sitting pretty with more than $3 billion in surplus.
Both bills have the support of the Tennessee Municipal League (TML) that represents local governments. TML president and Mayor of Franklin Dr. Ken Moore says that keeping sales tax money local ensures that those governments do not have to consider property taxes.
Speaking to FOX 17 News, Mayor Moore said, “It would mean that the $2 billion that we’ve missed out on getting for the past 20 years would then be returned to cities. And this would help our bottom line and continue us to not to have to increase taxes, property taxes and other taxes that cities are able to levy across the state.”
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Gallatin Mayor Paige Brown said that if the bills passed her city would get around $700,000 more a year in sales tax revenue. Money that could be used to fund roads and public safety projects.
“We’re trying to get the state to return to cities and towns the money that is actually raised in those cities and towns from the sales tax,” she said. “This would help us get ahead a little bit.”
A state tax law, which Gov. Bill Lee signed last May, will give the annual sales tax amount, estimated to be $10 million, to the Tennessee Titans once the 130 acres around the the stadium are developed.
A spokesperson for Governor Bill Lee’s office told FOX 17 News that giving sales tax money back to local communities is not included in Lee’s state budget for next year.
About the Author: Paula Gomes is a Tennessee resident and reporter for The Tennessee Conservative. You can reach Paula at email@example.com.