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Tax rate lower than expected

Bartlett’s tax rate might not be going up as much after all.

The city’s Board of Aldermen was expected to accept Tuesday night a certified tax rate of $1.62 per $100 of assessed property value. That’s down from the $1.67 the city originally considered when Mayor Keith McDonald proposed his budget earlier this month.

It’s a break that the city was able to offer because the tax increase always was intended to be “revenue neutral.” Because property assessments have fallen throughout Shelby County, the city needed to raise the tax rate to achieve the same income it had in previous years.

“Between the time that we spoke with the state and the assessor, our budget coordinator Eric Phan found we had overlooked some money,” said McDonald during a budget committee meeting May 23.
McDonald said additional funds were found when the city realized a tax abatement given to St. Francis Hospital would retire this year.

That money, according to the Mayor, was from a PILOT — payment in lieu of tax —program that is now fully on the tax roll. City’s use PILOT programs as an incentive for businesses to build facilities or create jobs within a community.

Bartlett’s aldermen are also seeking additional funds to support department’s expenditures.
The board will hear the second reading to adopt the budgets for the 2013-2014 general fund as well as street aid, sold waste, general improvement, drug enforcement, DEA enforcement, drainage, parks improvement, utilities, debt service and capital improvement funds.

Among those is a proposed $2 per household sanitation fee increase for individuals and businesses and increased water charges for users of more than 18,000 gallons of water per month.

According to information provided the board, 2,273 Bartlett water customers use between 17,800 – 241,400 gallons of water monthly. Those users will see an increase of $25.40 monthly consisting of an additional $3 for water and more than $20 in sewer charges. Water customers who see their bills spike in the summer months may be allowed to take part of a summer water-averaging program where they can irrigate their lawn and fill their pools without adversely affecting their sewer bill.

Also Tuesday, the aldermen were expected to pass a revised beer ordinance. The ordinance allows the board to increase fines on businesses that violate selling alcohol to people younger than 21 years of age.

The current ordinance has a $1,500 cap for multiple violations. The ordinance under consideration will mirror the state’s $2,500 maximum.

The board is also expected to approve a resolution to appropriate $46,200 for education incentive pay for fire department personnel and approve the cities’ group health insurance and acknowledge the receipt of a $7,234 H.W. Durham Foundation Grant.

In other business, Bartlett became one of six Shelby County communities to approve a July 16 referendum for a special election to establish a municipal school system. The aldermen voted unanimously for the referendum during a special-called meeting May 23.

Bartlett will follow much of the same process taken a year ago when voters overwhelmingly supported the establishments of municipal schools. That referendum was deemed invalid by U.S. District Court Judge Samuel “Hardy” Mays, which led to legislative action that opened the way for suburban schools.

BE logo squareUnlike last year’s referendum, July’s election will have additional costs associated as it will not be part of a general election.

One Response so far.

  1. Ken Pruitt says:

    This idea that the city of Bartlett isn’t going to pay more taxes due to the city merger is absurd. This article says that the property tax is going down from $1.67 to $1.62 per $100, and therefore, property taxes are going down. Here’s the problem with that idea:

    Let’s say someone is living on a property worth $100,000, and let’s assume the previously mentioned $1.67 per $100 as the tax. Arithmetic tells us then that the amount the person living on this property will owe the government $1,670 in taxes.

    Now, suppose for some reason that this person’s property value falls to $90,000. Now, assuming again a tax rate of $1.67 per $100, then this person will owe $1,503 in taxes. The general problem with government tax policy is this obsession for “Revenue Neutrality” on the part of public finance economists. In order to get at least the same amount of money out of this person, the tax rate must come up because the value of the property came down. So, in order to get at least $1,670 from this person, the tax rate must come up from the original $1.67 per $100 to no less than $1.86 per $100.

    But, you might say, “The article is clearly stating that the tax increase was only temporary due to the property values in Shelby County dropping! The tax rate is coming back down!” Now, here’s the problem with that idea:

    Let’s assume again that the property our hypothetical person is living in is again worth $100,000 and the tax rate dropped down to the previously mentioned $1.62 per $100. Arithmetic tells us that this person now owes $1,620 to the government. Before I go any further, let me point out to you that when you’re talking about $1,600+, $50 is all but negligible in terms of being called a tax break. I suppose this person is expected to get down on his hands and knees and thank his government overlords for this bountiful reward which they have presented to him for his hard work!

    The picture becomes even more absurd when we lower the value of the property from $100,000 to $50,000. In this case, assuming a tax rate of $1.67 per $100, the person who’s living at this $50,000 now owes $835 in taxes, but at $1.62 per $100, he owes $810 in taxes. I’m sure this person will be overflowing with joy at this massive $25 reduction in his $800+ tax!

    But, the absurdity of this truly being a tax break aside, the real problem with this idea that taxes are going down because the tax rate itself is going down presumes that the properties won’t be appraised at a higher value. Let me demonstrate;

    If you will recall from our earlier demonstration, the person paying for a $100,000 property at a tax rate of $1.67 per $100 owes $1,670 on the property, while at a tax rate of $1.62 per $100, he will be paying $1,620 in taxes. Again, the obsession with “Revenue Neutrality” on the part of public finance economists comes in. So, how can they get the same amount of money from this person even though the tax rate went down (albeit by a meager amount)? Simple! They re-appraise your property!

    At $100,000, assuming a tax rate of $1.62 per $100, he will pay $1,620 in taxes, but if his property is re-appraised at $104,000, then assuming the same tax rate, he will pay $1,684.80 in taxes. By doing this, they can simply say, “Look, we didn’t increase your taxes! This is just what your property’s worth!”

    Don’t be gullible enough to think that you’re actually getting a tax break here just because the official tax rate went down. Not only will they re-appraise the properties to get more tax revenue, but it can be safely assumed that our big government overlords have some revenue-increasing shenanigans hidden up their sleeve.

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