Local Tennessee governments seek share of state sales taxes

Cash money
Posted at 2:42 PM, Apr 04, 2022
and last updated 2022-04-04 17:28:35-04

GALLATIN, Tenn. (WTVF) — Local mayors want attention on two pieces of legislation proposed in the Tennessee House and Senate that would return more than $65 million in annual sales tax dollars to cities and towns.

If the legislation is passed, the money could impact funds available to invest in infrastructure and police and fire protection, among other services.

Tennessee increased sales tax rates to 7% from 6% in 2002. When this happened, the state government changed the cap on the local government portion of single item sales, and retained the state's levy and local option tax on purchases between $1,600 and $3,200.

It also kept all the new revenue collected for the state's general fund, not local.

“City mayors, council members, and commissioners across the state are seeking the revenue-sharing relationship between state and local government to be applied to 100% of sales tax revenue that flows into the state’s general fund,” said Tennessee Municipal League (TML) President and Franklin Mayor Dr. Ken Moore. The TML represents all cities and towns across Tennessee.

“This is probably the biggest ask cities and towns have ever made of our state,” said Gallatin Mayor Paige Brown. “Returning sales tax dollars to local governments is important to taxpayers as it will help ease the demand for higher property taxes."

"These funds are critical for us to manage the growth and keep our communities and the state of Tennessee attractive to employees, investors and residents," Brown added. "In Gallatin, as in many other Middle Tennessee cities, workforce competition has created the need for a very large pay increase for our employees and these funds would help cover that expense."

Franklin and Gallatin are not alone in the request for action. Clarksville Mayor Joe Pitts is among the litany of local legislators asking for attention on these bills.

"The City of Clarksville is among the country's fastest-growing metro areas. The return of sales revenues, or lack thereof, directly impacts the increasing demand for services by an expanding population," said Pitts.

Portland, Tennessee seeks the benefits of tax income sharing as well.

"We have been speaking with our state legislators on the importance of restoring these shared amounts; and that over the last 20 years many communities had to raise property taxes because this revenue was not available, even though it was generated within the city limits of our communities,” said Portland Mayor Mike Callis.

“Tennessee, which was once in difficult financial condition, is now one of the most fiscally sound states in America. I encourage our State to restore these shared amounts, so that communities like Portland can pave more roads and provide more public safety opportunities," Callis said.

The bills that local governors are encouraging for discussion include House Bill 2012 and House Bill 2562, in combination with Senate Bills 2076 and 2469.

Legislators are expected to either address these issues or jump to concluding the year's session within the next few weeks.

A chart representing the annual increase in revenue for Middle Tennessee cities illustrates the large amount of income that these potential changes could make.