The funding mechanisms of local and state government are headed for a collision course which will impact all residents and businesses - perhaps property owners the most - according to a new study from the TACIR (TN Advisory Commission on Intergovernmental Relations).
The full study is here and a news report on the study here.
The TACIR often influences how new policies are made in the state, and the ideas they present in their study point the way to how the current system may change.
One of the most notable elements of the study is that Residential property taxes have been increasing while tax revenues from business have been decreasing.
"TACIR noted that from 1973 to 2000, the residential share of total property tax assessments rose from 35 percent to almost 50 percent, while the commercial and industrial share hovered close to 40 percent. By 2005, residential property represented 53.3 percent of total assessments, while commercial and industrial assessments had dropped to 35.9 percent."
I always see these types of "advisory reports" as the smoke of a growing fire. The state has been reluctant to increase the share of revenues from sales taxes to cities and counties -- that seems to be the most obvious way to aid communities and keep property taxes from a dangerous increase. Fear of a rejection or an exodus of business means the individual will be targeted instead.
Another suggestion from this report is far more ominous and may point the way that some in state and local government want to steer -- more taxing authority for cities and counties. The report says:
"Significant new taxing authority that allows local governments to take advantage of existing tax bases or activities that are currently untaxed. Possible changes include an increase in the local sales tax single article limitation (currently set at $1,600), the authority to levy payroll taxes, and local ad valorem vehicle taxes in lieu of existing wheel taxes."
A local payroll tax?? That would be a very bad move. Yet, higher taxes are certainly being considered and it appears thought is being given to find a way to quickly and quietly to change the way residents in the state are taxed.
After all, the report also says one of the "problems" in creating revenue is the "truth in taxation" laws are so public that it is "politically difficult" to raise taxes on property. Sounds too much like some "less public" decision-making is the goal here.
Once the TACIR begins to influence legislation, it is usually with a specific goal in mind. Government is always looking for ways to increase taxation and public review is the best way to insure spending isn't bloated and that any new legislation is necessary and fair.