Shelby County’s tax burden just became more inequitable.
It happened when four Shelby County Commissioners whose constituents are primarily within Memphis – Steve Basar, Heidi Shafer, James Harvey, and Justin Ford – voted to end the four-cent rural school tax that was instituted to pay for a high school for Arlington and shift the burden to residents of Memphis
The rural school bond was approved about a decade ago and it resulted in the old Memphis City Schools not receiving its state-mandated Average Daily Attendance (ADA) share, which could amount to an estimated $60-75 million.
It seems only fair that if Shelby County Schools is seeking $57 million from City of Memphis for funding for the old Memphis district, it should seek repayment from Shelby County Government for changing the rules in the middle of the game when it comes to the rural school tax. In essence, Memphians will now be paying most of the remaining costs for the Arlington school bonds.
As a result of the elimination of the tax, residents of Shelby County outside Memphis had their property tax rate reduced five cents. People inside Memphis got a grand total of one cent.
Here’s what our friend, Steve Ross, at vibinc had to say about it:
Every once in a while someone does something that makes you wonder if they think you’re stupid.
You’ve probably felt what I’m talking about a time or two.
They give you that look.
They slight you in some way.
Or they sell you on a tax cut in an election year, to hide the fact that they gave someone else an even BIGGER, and unjustified tax cut.
If you left Monday’s Shelby County Commission meeting with that taste in your mouth, there’s a good reason…that’s exactly what happened.
Bad Taste in your mouth
In setting the County’s tax rate Monday, the Shelby County Commission gave a 5-cent tax cut to everyone outside of Memphis, and a 1-cent tax cut to people inside Memphis.
How’d they do that? They got rid of a 4-cent rural school bond passed years ago for the construction of Arlington High school.
The bond was only paid by residents in the former Shelby County School District because they got a school out of the deal. Tennessee’s ‘rural school bond’ law, allows a County to issue bonds, set to be paid by a specific group of people for a school, without matching funds for the other schools in that county. So for years, folks outside Memphis have been paying this additional 4-cents for the bond that paid for the construction of Arlington High.
Well, now that the old Shelby County Schools are no more, and only Arlington and Lakeland are using the Arlington High School, folks out in the ‘burbs don’t wanna pay that extra 4-cents for a school that’s not part of their district. And for Arlington and Lakeland to raise enough money to pay the four something million bucks of debt service would have meant raising their County tax rate something ridiculous, and that just doesn’t play in an election year.
To read more, click here.
And why is this being reported here and not in the CA?
Screwed, yet again, by those who don’t have the balls to live in this city.
DESPICABLE
I think this is a highly misleading discription of the situation. For the last 20 or 30 years, property tax payers in Shelby County outside Memphis have been subsidizing both the construction and operations of schools within Memphis. That resulted from the mismatch between average daily attendance and the ratio of the assessed value of property in the county outside the city to the assessed value within the Memphis. We do not yet know what the adas will be in the new municipal schools districts compared to the ada in the expanded Shelby County school district. Once that becomes known about March of next year, it will be possible to determine whether property tax payers in the municipalites will continue to be subsidizing schools in the expanded county school system. The debt service for the Arlington school is not being shifted to the county tax rate. It will be paid from the county’s share of the local sales tax revenue collected in the unincorporated area. True enough if it weren’t going for the debt service, the revenue, or part of it, could be used for county services to Memphis residents. However, all of the bond debt for the Arlington School will be paid off in the next four or five years.
But consider this: For at least 30 or more years before the County Commission members and county mayor administrations sought to limit funding for both Memphis schools and county schools, the county’s share of the local sales tax revenue collected in the unincorporated areas was shared with Memphis City Scjhools on an ada basis although none of the revenue was collected in Memphis. Over the years that totaled a huge amount of money for Memphis schools. The amount of unincorporated sales tax money that will go to paying off the debt for the Arlington school that otherwise could go to services for residents in Memphis and the unincorporated area will be miniscule compared to the funding Memphis City Schools received over the years from the unincorporated local sales tax revenue.
The statement that the rural school bond apprach resulted in Memphis schools not receiving an estimated $60 million to $75 million is also misleading. While the city’s schools did not receive that amount of money, the city’s property tax payers did not have to pay debt service to finance bonds to provide that money.
rather live in the ‘burbs than have my nether regions SHOT OFF by some nearsighted gang banger trying to cap his erstwhile grl friend cause she direspected hisself.
Hey anonymous at 10:47, got any other stereotypes you want to pass on?
It still seems to us that the action by the board of commissioners was unfair and illogical. Also, if the old city school district had received the ADA-required funding, it would have amounted to more than the amount of debt service paid by Memphians as their share of the Arlington School (not only in real terms but particularly in present value terms), based on our calculations.
If the Arlington School was only a few years from being paid off, it would have been fairer for county government to allow it to be paid in keeping with the original agreement. To change the deal now indicates to us that county government still owes money to the former city district.
We’re not so concerned about which pot of money the county is getting its money from as its willingness – as it has on several occasions – to treat suburban Shelby County – differently than it does the source of most of its revenues, Memphis. This financial sleight of hand is but the latest example.
Isn’t the point that while Memphians got a 1cent tax decrease, Luttrell’s base got a 5cent decrease. And some Memphis county reps made it happen.
“Also, if the old city school district had received the ADA-required funding, it would have amounted to more than the amount of debt service paid by Memphians as their share of the Arlington School (not only in real terms but particularly in present value terms), based on our calculations.”
I really don’t understand this sentence in the Smart City comment. The way the money shakes out, I don’t see any circumstances in which Memphis property tax payers would have been paying any part of the debt service on the bonds that built the Arlington school. Also, they will not be paying any part of the debt service under the new arrangements.
Many city officials and some others believe the myth that Memphis property tax payers subsidized county schools. The late 1990s federal court ruling that prevented Memphis voters from participating in county school board elections clearly outlines how city schools received part of the county property tax revenue for schools that was collected in the county outside the city and county schools received none of the county property tax revenue for schools that was collected in Memphis. Basically, the ruling was that Memphis residents had no financial interest in schools in the county outside Memphis..
Had the full amount of bonds been issued to give city schools the full ada share in connection with the Arlington school project, the property tax increase for tax payers throughout Memphis and Shelby County would have been higher than the 4-or-5-cent rate increase that taxpayers outside the city have been paying for the rural school bonds. All of the money collected in the county outside the city for the rural school bonds went to the Arlington project. Had it been a full countywide ada, some of the money collected in the county would have gone to city school projects.
(The major reason that advocates of the city schools charter surrender cited for their position was that they feared that county schools would switch to a special school district, which would cut the schools within Memphis off from the county property rate and thus eliminate the subsidy that city schools were receiving from taxpayers in the county outside Memphis.)
The reason the County Commission chose to use rural school bonds rather than a full ada approach was that the commission did not want to impose a tax increase on Memphis residents to provide money capital money for Memphis City Schools.
The switch in funding for the rural school bonds does appear to be a good political move by the Luttrell administration. However, I don’t see anything basically unfair in the sales tax approach. If the debt service had been shifted to property tax payers in the city, I think there would have been an unfairness but that is not happening.
Also, I think it would have been fine to continue the rural school bond tax.
Taxpayers outside the city will receive a bigger tax cut than those within Memphis, but everybody will be paying taxes at the same level again.
When all of the fingures are in next spring, I believe they will show that county taxpayers in the new municipal school districts are subsidizing the county school system, including the schools in Memphis, and not the other way around.
Sorry we were unclear. You said: “While the city’s schools did not receive that amount of money, the city’s property tax payers did not have to pay debt service to finance bonds to provide that money.” If city schools had received the ADA amount, it would have been substantially more than any percentage of the payments by Memphians for their portion of the bond costs if financed the traditional way.
We have long been aware that taxpayers outside Memphis pay more than their proportionate share for county services like criminal justice, health care, etc. It is part of the American tax structure for people with higher incomes and more expensive homes to help fund services for those who cannot pay as much in taxes. We don’t like the term, subsidizing, because it feels politically provocative, and it’s not a subsidy, it’s just way taxes are collected, deposited, the nature of the source of taxes and the services they are paying for.
“The reason the County Commission chose to use rural school bonds rather than a full ada approach was that the commission did not want to impose a tax increase on Memphis residents to provide money capital money for Memphis City Schools.” The point of the rural school bonds was to sidestep the obligation for ADA payments to Memphis City Schools, in our opinion, and this change in the rural school tax is continuing preferential treatment to a political base over the best interests of all county residents. Otherwise, there’s really no other logic about why all of a sudden, it mattered that all taxpayers paid the same amount.
Correct, the County Commission members did not want to provide funding for the city’s schools. However, the rural school bonds approach was supported by at least some commissioners who represented city taxpayers.
Some Memphis officials continue to say the city’s taxpayers funded schools in the county outside the city when it has been clear for years that they were not doing that. A basis for this comment on tax rate changes seems to be that taxpayers in Memphis are helping fund the Arlington school and that there was a deal initially that prevented schools in Memphis from receiving a fair share of the funding. I do not believe either is the case.
Except for the past year, when an increase in funding for schools was approved, the County Commission during the last two terms took steps to prevent growth in funding for schools. The surrender of the city schools’ charter and the shift to the county for all local school funding resulted in a significant reduction in funding for schools in Memphis. I guess that is what city voters who voted for the surrender wanted to occur. It might be argued that the surrender was a good thing for taxpayers but it certainly was not a good thing for the schools in Memphis, their students and their teachers.
Maybe in the years ahead, county commissioners who represent areas served by the new municipal school districts and representatives from the city of Memphis will combine and provide increased funding for schools countywide although higher county taxes will be required.
We agree: “Correct, the County Commission members did not want to provide funding for the city’s schools. However, the rural school bonds approach was supported by at least some commissioners who represented city taxpayers.” That was the point of the post – that four commissioners who should be representing the interests of Memphis taxpayers instead again showed more concern about non-Memphians when it comes to tax equity.
We’ve always thought the confusion about tax sources was that Memphians pay about 65% of the total taxes for Shelby County Governments, so Memphians have said they pay 65% of school funding. It’s may be technically true, but it’s not completely accurate. As with most things related to taxes, it requires more explanation.
The problem with that oversimplified thinking about the situation is if taxpayers in Memphis were providing 65 percent of the total county tax funding for city and county schools, schools in Memphis were receiving 70 to 75 percent of the money.. Taxpayers outside the city were providing 35 percent of the total county funding of the two school systems and county schools were receiving only 25 to 30 percent of the money.
I don’t think that is too hard to think through. If city taxpayers were helping finance schools outside the city, city taxpayers and school leaders would have been happy for the county to form a special school district. That would have ended any city support for county schools ,and taxpayers in the city could have “saved” the million they were provding annually in funding for schools outside the city. Based on what some city officials and other city supporters have been running around saying, why would this not have been true?
In reality, at the end of the two school systems, $26 million to $28 million annually was flowing from taxpayers in the county outside the city to Memphis schools and no money was flowing from county taxpayers in the city to the county’s schools..
Supporters of the charter surrender in effect encouraged voters to give up $57 million or $65 million annually or whatever the total was in funding through city government to prevent what they thought was a potential loss of $26 million to $28 million in county tax revenue. I can’t see that they understood what they were doing. From a school funding standpoint,
it made no sense. You might say it was really about tax equity. Do you really think that people running a school system care about tax equity? They just want the most money possible to run the school system and don’t care where it comes from.
Really, this argument about a special property tax or unincorporated sales tax revenue to pay off rural school bonds is not worth spending any time on.
:
taxpayers in the city could have “saved” the million they were provding annually in funding for schools outside the city.
The word should be “millions” and not “million.”
For those who want to contend that Memphis taxpapers were providing 65 percent of county funding for county schools, Memphis schools received a larger amount of money from the 35 percent paid by county taxpayers outside the city for city schools than the 65 percent of city funding provided for county scdhools.
We understand. It’s never about the raw data in dollars. Regardless, it fed the city’s contention that they should have had a voice in the old county school system. Of course, county taxpayers could have said the very same thing about the old city school system (and some did but not to the degree of city residents).
Would you two take your fight outside so we bigots can be at peace with our prejudices.