Council approves sales-tax referendum

To fund pre-k; any surplus goes to city

Memphis voters will consider this fall a sales-tax increase designed to fund a pre-kindergarten program and lower the property-tax rate.

The Memphis City Council unanimously approved an ordinance Tuesday for a referendum in October or early November asking voters to raise the city sales-tax rate half a percentage point from 2.25 percent to 2.75 percent.

If approved, the total salestax rate in Memphis would be 9.75 percent, the highest allowed in Tennessee.

The new tax is expected to generate $ 47 million in new funds annually.

A commission appointed by Memphis Mayor A C Wharton and approved by the City Council would oversee the proposed pre-K program, which would serve only Memphis children.

The commission would bid the work of running the classes out to community and nonprofit organizations, charter schools and child care centers, accord- ing to Councilman Jim Strickland, the ordinance co-sponsor.

The program would serve about 5,000 children at a cost of $6,000 per child per year, for a total cost of about $30 million, Strickland said.

Funds generated by the tax beyond the cost of running the program would be sent to the city’s coffers to lower the prop- erty-tax rate.

Councilman Shea Flinn, who also sponsored the ordinance, said the referendum lets citizens, rather than the council, decide whether to raise taxes.

The sales-tax hike would lighten the load Memphis property-taxpayers carry for maintaining the city’s government, he said.

“We in Memphis can’t afford

not to do this,” Flinn said.

“I wish this could solve all the problems in our city. It can’t.

“But it can start to solve many of them,” Flinn said.

Council member Wanda Halbert had said she wasn’t sure she would support the measure before Tuesday’s council meeting.

“The voters have already spoken, have already voted, to get out of the business of education,” Halbert said, referring to the referendum in 2011 to surrender the Memphis City Schools charter and merge with Shelby County Schools.

“And we find ourselves now (ready) to ask the voters again to take on another education initiative,” she said.

Wharton told council members he supported the pre-K program the tax rate would create.

“The beauty of this approach, contrary to Head Start or pre-K under a state mandate, is that the people in this room will shape (the program) to meet our needs that includes some of the most successful components of the Head Start program,” Wharton said.

Tuesday’s vote was the third and final vote on the ordinance, with the first two held before city budget talks began in April.

Strickland said holding the referendum before November was essential to avoid competing with the county for a tax referendum.

Last year, the Shelby County Commission approved a sales-tax referendum, which voters turned down in November.

Though a county salestax referendum would trump one for the city, the county can’t hold another referendum within 12 months of the last vote.

Shelby County’s six other municipalities voted last year to raise their local sales taxes to the maximum 2.75 percent to fund new municipal school districts they hope to establish.