May 9, 2007

Legislators Pushing Stealth Property Tax Increase

A handful of state legislators are tryiing to make it possible for unelected bureaucrats to raise your property taxes. Ben Cunningham of Tennessee Tax Revolt has uncovered legislation that would, if passed, allow county governments to raise property taxes by up to 3 percent after a reappraisal without going through the normal public hearing and legislative process.

One of the sponsors of the legislation is state Sen. Doug Henry, D-Nashville, who in 2005 pushed legislation that would have stripped the right of citizens to overturn wheel-tax increases via a referendum. In fact, Sen. Henry has twice in the past two years supported stripping Tennesseans of their right to use referendums to defeat increases of two kinds of taxes - the wheel tax (car tag fee) and the local-option sales tax. More on that in a minute.

Also sponsoring the stealth property tax increase legislation: state Sen. Randy McNally, R-Oak Ridge, and state Sen. Tim Burchett, R-Knoxville, and in the House by state Rep. Craig Fitzhugh, D-Ripley.

The legislation, House Bill 1578 and Senate Bill 0757, would permit a county or municipality to adjust its certified tax calculation by up to 3 percent "to account for a projected increase in the cost of services funded by property tax since the previous year; provided, that the adjustment is made by a method approved by the state board of equalization."

Currently, after a countywide property value reappraisal every four years, county commissions must adjust the property tax rate to make the reappraisal "revenue neutral" on property that existed at the time of the previous reappraisal four years before. If the property tax rate was $2.00 and the average property value doubled from one reappraisal to the next, the tax rate would be cut in half to $1.00. Under the proposed legislation, the new "certified tax rate" could be set instead at $1.03, a 3 percent increase in property taxes without the county commission having to vote on it, and of course without public input.

Under current law, that $1 certified tax rate could only be raised by legislative action by the county commission.

Any legislator who has voted for this bill or votes for it in the future should understand that what they are voting for is higher property taxes.

As for Sen. Henry, his support for legislation that would enable higher property taxes without public input or a vote by elected officials is not surprising.

In February 2005, Sen. Henry sponsored and pushed legislation designed to make it easier for county commissions to increase wheel taxes (car tag fees), and to strip from state law the current right that Tennessee residents have of using a petition drive and referendum to overturn wheel-tax increases. And in December 2005 Sen. Henry backed a recommendation by the Tennessee Advisory Commission on Intergovernmental Relations that would put an end to the requirement that increases in the local-option sales tax be approved by voters in a referendum. The respected Tennessee Journal reported in its Dec. 19, 2005, edition that Henry made a motion and the commission then voted to recommend that the legislature remove the referendum requirement.

In short, twice in less than a year Sen. Henry actively supported proposal to take away your existing right under Tennessee law to vote on increases in your taxes. If Sen. Henry had his way, it would be easier now than ever for your local or county government to raise your wheel tax and your local sales tax.

Now he's trying to make it so unelected bureaucrats can raise your property taxes. The question is why? I've emailed all four sponsors and will let you know if and how they respond.

Update: No response yet from McNally, Burchett or Fitzhugh. Sen. Henry emailed to say the Senate version of the bill "has been taken Off Notice for hearing." I don't know if he means it was already taken off notice, or he took it off notice today after I emailed about it. He also doesn't explain why he thought the legislation was a good idea, why he proposed or sponsored it, who wrote the legislation and asked him to sponsor, and why he believes unelected bureaucrats ought to be allowed to raise property tax rates without either a vote of the elected legislative body of the county or the people themselves.