MauryTHINKS

By ASHLEY BONE and D. FRANK SMITH/Staff Writers for the Columbia Daily Herald

SPRING HILL — Reinstating property taxes is being discussed as one possible option to keep the city’s finances afloat.

Though the city’s coffers are better off than last year, Finance Director Jim Smith says the city will continue to operate in the red if revenues are not increased.

“Money is being taken out of the general fund just to make payroll,” Smith said, adding that city property taxes, which were eliminated in 2005, may need to be reinstated for area residents.

“We’re there. We’re at the point where we have to have property taxes,” Smith said. “They have been postponing the inevitable and are at the point where the rubber meets the road.”

In March, city officials requested the opinion of the University of Tennessee’s Municipal Technical Advisory Service on how the tax could be reinstated.

Ron Darden, MTAS’ management consultant, wrote that a resolution the city passed in 2003 to require a public referendum to reinstate the tax was invalid.

“There is no express authority from the state legislature or the city charter to conduct a referendum on the approval of property tax rate increases in Spring Hill,” Darden wrote.

In 2005, after several years of budget surpluses, city officials effectively eliminated the property tax by lowering its rate to 0 cents, but did not remove it outright. Two years prior, the city approved the Taxpayer Bill of Rights, which required the citizens to vote to approve any tax rate increase.

But Darden wrote that the requirement was “inconsistent with constitutional provisions and state law.”

Alderman Eliot Mitchell, who also serves on the city’s finance committee, said it’s premature to say if the city will reinstate property taxes.

He said there are two main components the city needs to look at.

“We know we are running in the red,” Mitchell said. “In the budget process, we don’t see it changing next year. We need to decrease expenses and increase revenue.”

Sales tax revenues are up with the recent opening of Cracker Barrel, Kohl’s, Logan’s Roadhouse and SuperTarget, but it isn’t enough to pull the city out of the red, Smith said.

“The slowdown of building permits issued has also affected the city’s general fund,” Smith said.

Last year, the city had a $2.9-million deficit in the general fund. With recent budget cuts and imposed fees on fire department services, the city is now about $633,000 in the red.

Smith said adding property taxes would only increase homeowners’ taxes by about $15 per month. A 40-cent city property tax on a $200,000 home would be $200 per year.

“It’s two lunches per month,” Smith said, adding that reinstating property taxes would generate nearly $3 million in the city’s general fund on an annual basis.

City Administrator Ken Weaver said as the city grows, more police and firemen will be needed to service the citizens, and the money will need to come from somewhere.

Several big-ticket items will also be needed for the city in the future, including hiring more police officers, repairing and expanding roads and a $15-million waster water treatment plant expansion, Smith said.

“Because we have grown with all the developments and subdivisions, the streets became city streets,” Smith said. “Some of them need to be repaved and resurfaced. The city grew so fast, that they didn’t know they would outgrow the wastewater treatment plant so fast.”

The Board of Mayor and Alderman will address the city’s looming financial issues in May.