County could supplant tax hike

1963 act gives option if suburban towns seek to raise funds for municipal schools

If any suburban government approves holding a referendum for a half- cent bump in the local sales tax rate to help fund municipal schools, the county would have 40 days to supersede the move by seeking a similar increase countywide.

The 1963 Local Option Revenue Act gives the county commission that length nicipal Technical Advisory Service legal consultant.

However, if the overall vote fails, the suburban city could then continue with the local referendum process.

The 40- day factor has been mentioned only a couple of times in public meetings by consultants with Southern Educational Strategies, who conducted feasibility studies for municipal schools for Shelby County’s six suburbs.

But the suburbs are aware of the caveat and its potential affect on funding their systems. The cities are on tight time - tables to hold referendums and elections for school boards in time for the desired start of the 2013-14 school year.

“It’s what the law says,” Mark Brown, Bartlett’s chief administrative officer said. “We’ll follow that procedure and process and see what they do.”

Suburbs across Shelby County have started the process to hold May 10 ref-

erendums for voters to consider municipal school systems. The individual ordinances also are seeking a referendum for the half- cent local option sales tax increase from the current 2.25 percent to 2.75 percent, the maximum under state law.

Arlington is slated to consider the ordinance on final reading in a special meeting Feb. 21. Other municipalities will vote on their versions in early March.

Gerald Lawson, Arlington’s town attorney, said Tuesday the town probably would hold the referendum establishing the school system, but delay the sales tax measure until the county decides what it will do, since the May 10 date falls within the 40- day span for the county to decide.

Lawson said if the county decides not to ask for the countywide referendum, Arlington could hold the sales tax referendum to coincide with the Aug. 2 county general election.

Bartlett Mayor Keith McDonald expressed similar sentiments when the suburb passed the first reading of the two ordinances Tuesday night. The sales tax hike ordinance did not contain the May 10 date for the referendum. “It could be that we would have to do the referendum on the schools in May,” the mayor said, and hold the referendum on the sales tax hike later.

County Commissioner Mike Ritz, chairman of the commission’s budget and finance committee, said last week he doesn’t think the time is right for a countywide sales tax increase.

“Sales taxes are regressive,” Ritz said. “For big ticket items, sophisticated shoppers may shop away from high sales tax communities.”

The hike could be a significant factor in funding the suburban schools. According to feasibility reports for the various suburbs, the halfcent sales tax increase would generate more revenue than a 15- cent hike in the property tax rate in most cities.

For example, in Bartlett, the half- cent increase would produce $3.6 million in revenues, almost $2 million more than a 15- cent hike in the city’s $1.49 property tax rate. In Collierville, the extra half- cent would mean an estimated $3.9 million, or $1.7 million more than a 15- cent hike to the current $1.43 tax rate.

All of the revenues from the half- cent sales tax, if approved by the individual cities, would stay in that jurisdiction for schools, Jim Mitchell of Southern Educational Strategies said. If the increase is instituted across the county, half of the resulting revenues would go the jurisdiction where the sale occurred, with the other half earmarked for education.

That education amount would be divided on a average daily attendance formula, according to Brown and Mitchell.