Thursday, December 01, 2005

How About Doing Something That Really Addresses Our County Tax Problems?

Shelby County Mayor A C Wharton has begun once again to lay the groundwork for another legislative session in which he will seek the authority to broaden county government’s tax options, but in truth, even if he gets approval for his local development taxes, it’s still a small bandage on a hemorrhage.

In fact, the adequate facilities taxes or impact fees that he is seeking do nothing to address the structural tax problems that are mirrored on the county’s balance sheet. While Mayor Wharton is rightly focused on getting the county budgetary house in order, pursuing these taxes is like putting a pretty façade on a house whose internal structure is caving in. It may look good for awhile, but in the end, it’s still going to collapse.

In truth, the adequate facilities taxes and impact fees would have been helpful for county government…about a decade ago. But now, the taxes don’t generate enough revenue – estimated at around $10 million or so a year – to really solve any problems of Shelby County Government. There’s only one way to do that, and it’s the total overhaul of the tax structure.

As we reported on our blog last week, in a recent study of the largest city in each of the 50 states plus Washington D. C., Memphis was found to have one of the most regressive tax structures of any city our size. The proof was in one simple fact – the more you earn in Memphis, the smaller percentage that you pay in taxes.

Adequate facilities taxes and impact fees do nothing to cure this structural problem, which stems from our local overreliance on sales taxes and property taxes as the primary sources of revenues. The only real solution that would correct the regressivity of our tax structure is passage of a state income tax or a local payroll tax.

If county government is to put its energies and resources behind an aggressive lobbying campaign for new taxes that are a long-shot on their best days, why not put the energy behind something that offers real tax relief for Shelby County?

That said, it is the height of governmental irrationality that our county elected officials must travel to Nashville to ask approval of state legislators for the way that we choose to tax ourselves. It’s enough to make you wonder why we cared so much about home rule back in the early 1980’s.

It was back then that Shelby County worked hard to successfully convince the Tennessee General Assembly to pass home rule for our county government. It was said that home rule would break our county’s dependency on the state legislature for its blessings on Shelby County’s major decisions.

The basic concept of home rule is simple: the authority to act in local matters is transferred from a state law to a local ordinance. Home rule was supposed to shift much of the responsibility and authority for local government from the state legislature to the county board of commissioners. Somehow, the reality of home rule has failed miserably to live up to the promise of home rule.

Yet, here we are, 20 years later, still watching the spectacle of our county executive, hat in hand, begging for the authority to operate his government in accordance with the mandate given to him by his own local voters. In other words, a gaggle of legislators from rural East Tennessee can keep Shelby County Government from having the ability to run its own operations.

But first and foremost, county officials have to convince their own legislators to give them the authority to broaden their taxes. The bill can’t get to the floor of the Legislature for a vote until it has almost unanimous Shelby County legislative support. That’s proven the hardest hurdle of all in recent years, either because of inter-Democratic Party rivalries or because of the no-tax-pledge Republicans who fear for their name to even be associated indirectly with new taxing authority for local government.

It’s a bizarre reality of the intergovernmental relationship that even our own local legislators refuse to give our county elected officials the tools to do their job. Oliver Wendell Holmes may have said that “taxes are the price that we pay for civilized society,” but these days, the covetousness for reelection far outweighs any responsibility to serve the interests of local communities strapped for the revenues needed for their services.

Perhaps, it would make more sense if Mayor Wharton worked to build a coalition of county governments across Tennessee which marched on Nashville to demand “real” home rule. That way, no legislature would have to vote on new taxing authority. Rather, they would be asked to vote to allow the 95 counties of Tennessee to control their own destinies and eliminate their frequent treks to Nashville for approval of everything from new revenues to increasing the members of some county boards.

Getting serious home rule authority passed might even be simpler than lobbying for passage of impact fees and adequate facilities taxes. And it’s time better spent, because besides being band-aids on budgetary hemorrhages, these taxes once again hit property taxpayers, who already bear the brunt of the local tax burden.

If there is a way to pass a local privilege tax for the right to be employed in Shelby County, the tax potential can finally be tapped of the 61,398 people who drive into Shelby County to work and cross the county line to go home each night. Memphis is ranked 13th among major cities in the number of commuters that come into its borders to work each day.

But back to adequate facilities taxes and impact fees, it’s worth noting that there are 14 counties and 85 cities that have been authorized to enact these taxes. Even Bartlett and Collierville have impact fees (they may not call them that but that’s what they are), not to mention Piperton and Fayette County.

It’s a damning indictment of our own legislators’ timidity that they can’t even get done what their colleagues did for Williamson County, Maury County, Marshall County, Robertson County, Rutherford County, Cheatham County, Sumner County, Dickson County, Hickman County, Trousdale County, Fayette County, Macon County, Montgomery County and Macon County. Those counties’ legislators did their jobs, and those counties were given the right to decide if they wanted development fees.

So, how about a vote on “real” home rule authority instead?


mike said...

"If there is a way to pass a local privilege tax for the right to be employed in Shelby County...." Do you really think this way? A right to be employed? Not a Roosevelt-ian right to *have* a job, but an authoritarian right to *be allowed* one?

"If you don't like it here, just move soemwhere else!" you might as well say.

Oh wait....

LeftWingCracker said...

Mike, that's disingenuous, and you know it. They live in the suburbs to avoid paying the social costs of living in a metropolitan area, and they should not be allowed to escape these costs.

If it weren't for the infrastructure that Memphis provides, these people wouldn't HAVE a job, at least not in this area, and they should not expect us to subsidize their lifestyles in the suburbs.

MidsouthGambler said...

People that are pro income/payroll taxes always want to complain that the sales tax and property taxes are regressive. There is a way for you income taxers to get conservative support and live up to your hype: agree to couple an income tax with a constitutional limit on the "regressive" sales tax rate. Why do so many conservatives oppose the income tax? Because we know eventually the spenders will just raise the sales tax to where it is now, and will have an income tax on top of that. If you really have such a problem with the sales tax, then you should be in favor of limiting it. If the Democrats ever followed their rhetoric and took this tact, they could get enough Republican support and pass their precious income tax.

Smart City Consulting said...

Those of us at Smart City Memphis have no objection to limiting sales tax increases, and if you look at most states with income taxes, sales taxes are considerably lower than ours and do not climb back to previous levels. In fact, it's not the "tax and spend" liberals that scare us, but the present conservative penchant for "tax and charge it." It's hard to trust these self-proclaimed connservatives to protect tax payers, and that seems to be the case in Shelby County since the $2 billion debt was the legacy of eight years of a Republican county mayor.

LeftWingCracker said...


I agree that a cap on sales taxes, and a LOW cap, is critical to ANY income tax plan, and I would support it wholeheartedly.

LibertyLarry said...

"They live in the suburbs to avoid paying the social costs of living in a metropolitan area, and they should not be allowed to escape these costs."

That's pure rubbish. What social costs are you referring to that non-Memphians should pay? Perhaps they should pay the costs of an arrogant mayor who spends money like a desperate housewife? Or the costs of city council that acts like cuckold old men? How about the costs of school system that's pathetic despite spending more per student than the county? Should non-Memphians pay for a the boondoggle Downtown-Airport light rail that will require over $10-million dollars/year subsidies? How about the costs of a criminal element that breaks into houses while the occupants are doing honest work for a living? A corrupt mayor, a corrupt city council, a corrupt school board, a corrupt police force ... yea, everybody should be forced to pitch in for those!

And I guess none of them ever spend any money in Memphis and pay sales tax to the Memphis coffers? None of them shop at Wolf Chase; none of them visit Beale Street; none of them eat in Memphis restaurants. I guess they just drive on a Memphis city street that would be there anyway and never spend a dime in Memphis.

And maybe a lot of those jobs in Memphis wouldn't be there if the city would stop annexing! Of course if the legal morons in black robes around here had any cajones, the would enforce the annexation laws and Memphis (and others) wouldn't be able to annex at will.

Stop trying to steal money from those who don't live in Memphis and concentrate on controlling spending, controlling taxes, and making Memphis a better place to live to attract them back into the city.

Whew ... and I haven't even address the evils of an income tax! lol

BTW, my house is in the midtown area.

turnerarch said...
This comment has been removed by a blog administrator.
turnerarch said...

Maybe Memphis should force the vagrant population into the suburbs, much as Germantown picks them up only to escort them to the city limits. How would the suburbs handle this social cost? Lets stop allowing the sick and injured in both Arkansas and Mississippi use of The Med until their states agree to cover their costs in full. Encourage DeSoto and Crittenden Counties to build their own regional medical centers and take care of their own citizens. I certainly don't utilize I-55 at the state line or the Mississippi River bridges often enough to constitute 2 bridges (with another on the way) or an 8 lane highway. If the EPA says DeSoto and Crittenden Counties do not contribute to our air quality issues, then stop allowing residents of those areas to drive their cars into a county plagued with smog violations every summer. Reverse the recent decision made by the University of Memphis to waive out-of-state tuition for residents within the metropolitan sections of Mississippi and Arkansas.
DeSoto's explosion of retail growth, including a new regional mall, will greatly diminish the amount of sales tax revenue crossing the state line. A similar period of retail expansion can be expected on the west bank of the Mississippi with the opening of several manufacturing plants and employment centers over the next three years. Shelby County’s dominance over the areas retail trade may not be at an end, but it is certainly waning.
I hate to say it, but Memphis missed its chance to lift itself up to the ranks of such regional cities as Austin, Nashville, and Charlotte with the passing of the nineties. At this point we are talking about simply maintaining the slow (but steady) growth in population, employment, and income which has been the hallmark of Memphis development for the past thirty years. If this region does not pull together soon, we could actually see a decline in quality of life and economic strength similar to that experienced in areas such as Buffalo, Detroit, and St. Louis in previous decades. If not, we might as well resign ourselves to the present, because Beale Street, Graceland, and even Fed Ex will not be able to maintain Memphis as a viable urban area in a global economy.

LibertyLarry said...

You gave fine examples of the incompetence of our own politicians.

However, don't make people in G'town (or Memphians) pay a payroll tax just because G'town and others have enough sense to have laws against panhandling and actually enforce them! I don't often agree with Ricky 'I take bribes' Peete, but he is correct in pressing for stronger ordinances in against pandhandling.

Coerced charity is still coercion and is wrong. We shouldn't be sending the Med's helicopter across state lines unless someone on the scene can verify proof of insurance. I know it sounds harsh, but you're not going to Ark. and Miss. to pay up as long as you keep providing service without payment.

I've always disagreed with letting people living in Ark. and Miss. have in-state tuition to Tennessee state schools. I know the schools want to keep their numbers up, but to do so the expense of Tennessee taxpayers isn't right to do it. A city payroll tax wouldn't go to those institutions anyway. So it is irrelevant to the debate on a payroll tax.

The bridges across the Mississippi come from gasoline taxes. Again, irrelevant to a payroll tax debate. Regardless, I don't think we need another bridge or interstate to pass thru downtown. We have enough traffic already and don't need more. They can build in Tipton country or Mississippi for traffic just passing thru.

Air pollution is worthy of whole different blog. Diesel trucks are coming online now with catalytic convertors to tackle the NOx problem. That should help a great deal with the non-attainment problem ... as would greater use of biofuels for the VOC portion of ozone creation. The courts have slapped the EPA's wrist more than once on being too stringent without justification. But back to the subject matter at hand, a payroll tax would do nothing to alleviate this. So it is irrelevant to the debate on a payroll tax.

So you think that enacting a payroll tax would draw those new shoppings centers in Desoto County and elsewhere back to Memphis??? Not likely. They're following the population which is fleeing the costly and sorry city leadership we have.

The city should look at eliminating jobs such Janet Hooks' position as manager of the Religious and Cultural Affairs for the city. Rather than another tax.

You're correct in that Memphis has blown more than one opportunity to become a premier city. Things are improving in many areas of the city despite ourselves. I just don't see a payroll tax as path to becoming a premier city.

turnerarch said...

I think we basically agree and are straining at a “nat”. All I'm stating is that there are costs induced by citizens throughout the metropolitan area, yet the burden for bearing these costs is not distributed evenly. The payroll tax is income tax, and thus unjust. However, I support the basic principal that at least some leaders might be realizing (I hope) that the way in which this area pays for its amenities might be pressing more heavily on certain segments of the population. That’s the one element that links all of my examples together.