News from the Tennessee Valley State, Local and National news
SUNDAY, APRIL 22, 2007

Hartselle looks at combined tax raises

By Deangelo McDaniel · 340-2469

HARTSELLE — With a proposed vote on a 12.5-mill property tax increase in peril, some city officials concede that a tax combination involving a sales tax hike may be the only way to fund a new high school.

“I don’t think anyone disagrees that a need for a new high school is there,” Councilman Bill Smelser said. “The only question is how to fund it.”

With Councilman Bill Drake firm that taxpayers don’t want a 12.5-mill property tax vote, local legislation to allow the vote appears dead.

Rep. Ronald Grantland, D-Hartselle, and Sen. Arthur Orr, R-Decatur, say they will not break the local legislative delegation’s rule of unanimous consent before introducing local bills to allow the city to hold a vote.

What is Hartselle’s alternative?

The council can put a 7.5-mill property tax vote before electors without local legislation. If it passes, city leaders could by a majority vote enact a 1-cent sales tax increase.

The 7.5-mill tax increase would generate about $650,000 annually, and the 1-cent hike would generate another $1.49 million per year, Mayor Dwight Tankersley said.

The combined taxes, added with money Hartselle already pays on bonds, would be enough to pay for the proposed school with an estimated cost of between $25 and $30 million.

Tankersley said the annual payment on a $30 million bond and the city’s existing debt would be about $2.3 million.

The city already spends $1 million annually on bond payments.

“We’re only talking about an increase of $1.3 million per year,” Tankersley said.

“That sounds like a workable plan,” said Kenny Thompson, the council president who campaigned for a 1-cent increase in August.

Thompson backed away from the plan just minutes before a council meeting because he said the sales tax wouldn’t generate enough money to construct a high school.

“Maybe we could use the two taxes to pay for the school,” he said.

Not so fast, Councilman Mark Mizell said. He said the city is too dependent on sales taxes, and he worries about the impact a new tax would have on Hartselle’s retail market.

“I’m pretty much opposed to it,” he said about the penny increase. “In some towns and cities a sales tax may be beneficial, but not here.”

To approve a 1-cent tax increase, the council majority would have to go against its 2004 campaign promise of no new taxes.

In justifying his change of position on new taxes, Thompson said: “There comes a time when you have to be a statesman and not a politician.”

The one-penny increase would raise the sales tax rate in Hartselle from 8 cents to 9 cents. That is what customers pay in Decatur. In rural areas of Morgan County it is 7 cents.

Even if Drake changes his position, city leaders concede it’s unlikely that voters will approve the 12.5-mill increase.

“Our history is just not good with property tax votes,” Thompson said.

In 1990 and 2004, voters overwhelmingly rejected tax increases for schools. These decisions, however, didn’t change the school system’s needs.

“If anything, they have gotten worse,”Smelser said.

School and city leaders say the problem with overcrowding will multiply as Hartselle’s population grows.

“I have a daughter who teaches at the high school and three grandchildren who will attend school there,” Smelser said. “I will consider the option (of a sales tax increase) if this is the desire of the council.”

Tankersley said a sales tax increase is the only option if there is no property tax vote.

“Obviously, the need for a new high school is not going to go away, and it’s a real need,” he said.

“If a property tax fails, or doesn’t go before the voters, the next step would be to look at a sales tax.”

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