Blount County commissioners on Tuesday voted 20 to 1 to put discussion of a sales tax referendum on the Aug. 21 County Commission meeting agenda.
This is the county’s first step in approving a grassroots group’s quest to raise the local option sales tax half a cent to the maximum allowed -- 9.75 percent -- with revenues to be pledged for education.
Blount Countians for Education Excellence began meeting with local officials three weeks ago lobbying to have the measure placed on the Nov. 4 general election ballot. Proponents said the idea is to capture this sales tax revenue for local school systems before the state does so and sends that money to state coffers.
While commissioners eventually passed the measure on for discussion at the upcoming meeting, it wasn’t without much discussion. For one thing, commissioners questioned how the money would be split.
The current plan is for half the money generated from the half cent increase to go to the three different school systems based on average daily attendance. The second half of the increase would be divided based on where the tax was collected.
At commissioner Holden Lail’s request, County Finance Director and Assistant County Mayor Dave Bennett explained that all sales taxes are remanded from the state to the county trustee and usually are about two months behind.
“If the trustee puts in a million, the county gets 63.3 percent and 27 percent goes to Maryville and 9 percent goes to Alcoa. The second half is remanded to the jurisdiction where the tax was collected,” he said. “Maryville and Alcoa get the biggest chunk, the county gets our portion and Rockford, Friendsville, Townsend and Louisville get whatever sales taxes they collected.”
Lail and others asked if the county could negotiate how the second half of revenues are distributed so that instead of going to the jurisdiction where they were collected, the money would go where students were.
“In my way of seeing it, even though the sales taxes are collected in Maryville, 63 or 65 percent generated comes from county residences and that represents students. Rather than starting that split, why not let it fall in the same portion as the population of students. The more students you have, the more need you have generated,” Lail said. “In my way of seeing it, in terms of collections, most businesses exist in the cities, and that throws things a little bit, but most of the money is generated by residents of the county and most have students in county school. A fair distribution would be take that half cent and distribute it all by the population of students.”
Bennett said the hard part of doing that would be negotiating to convince the cities to allow this to be split totally on average daily attendance and not also on jurisdiction where taxes were collected.
“Let’s say this goes out, and we aren’t able to reach an agreement, and it is defeated. The cities can come back later and enact the tax by referendum, like what happened in Morristown. Then they get all of it. Estimates are the new half cent will generate $7.5 million annually,” Bennett said.
Bennett said that while the cities of Alcoa and Maryville are passing resolutions supporting the referendum, the county referendum supersedes the municipality referendums. If the county votes to put the referendum on the ballot, only one referendum would be held, and it would be county-wide in both the incorporated and unincorporated areas.
If the county commission chooses not to act, the cities can choose to put the referendums on their ballots. “If we choose not to, the cities, by their vote, are putting it on their ballots as city taxes, and they get all money,” he said.
Mayor Jerry Cunningham said the state could also opt to take the remaining half-cent. “It’s a three-sided coin, too,” said Cunningham. “The state can step in, too.”
Bennett said state comptroller John Morgan said three years ago his plan was to raise the sales tax in ever county not already at maximum of 9.75 percent and capture that revenue. “We get into next year, and the state economy worsens, it may be on table again,” Bennett said.
“If we have already increased our local share to 9.75, ours wouldn’t go up,” he said.
Commissioner Wendy Pitts Reeves asked about the cost of the referendum. “I understand we can put this on the referendum, and this won’t cost the county any money, and that’s what I was concerned with,” she said. “The only reason I was more or less in favor of this is it wouldn’t cost us.”
Commissioner Mike Walker said his personal feelings are that if this measure is put on a referendum with the current economy, county residents are going to vote “No” in the unincorporated areas. “I feel it will be ‘Yes’ in the incorporated areas and that will that hurt us,” he said. “We still end up paying for it and receiving no benefit.”
Massey Electric Co. owner Randy Massey, who is with the group Blount Countians for Educational Excellence, said the idea for pursuing the referendum to increase the sales tax grew from looking at state figures. He said 40 percent of the sales tax in Blount County is collected from transients, people from Knox County and other areas spending money in Blount County.
Massey encouraged the commissioners to realize the people of the county need to be on board with the cities so that everyone gets a share of the tax revenues.
“It’s in the interest of the cities for this to fail in Blount County and pass in the cities. As far as a negotiating tool, they have nothing to lose, and everything to gain,” Massey said. “We looked at Morristown and Hamblin County. It failed in Hamblin County and passed in Morristown. Hamblin County found out the reality that Morristown gets all the money.”
Massey said the 45 members of the group see the needs of the schools in all three systems both now and in the near future. “You brought three new county schools on line. You have an excellent education system that going to need more money,” he said. “The reason we want you to let us put this on the (county) ballot is to let visitors help pay for it. All we’re asking is give us a chance to get this on the ballot.”