Wilson County voters overwhelmingly defeated a proposed half-cent sales tax increase on the ballot Thursday, and next up is Lebanon’s turn to see if it can reap the added revenue.
Unofficial results from the referendum on Thursday’s ballot showed 15,942 voters said no to the additional half-cent tax increase on items bought in Wilson County while 4,879 supported it.
“I guess my hopes were the citizens had the opportunity to have a part of the sales tax dollars raised,” said Wilson County Mayor Randall Hutto. “They said they didn’t want a sales tax increase by about 3-to-1.”
Hutto said it was Lebanon officials who originally asked for the sales tax increase to be placed on the current ballot as a referendum. However, unlike in November 2012 when Lebanon voters turned down a half-cent sales tax increase dubbed Pennies for Progress, the Wilson County Commission got involved in this go-around.
“What happened was the commission wanted to people to speak on raising the sales tax and have half of that go to education,” Hutto said.
Hutto said the half-cent sales tax increase would have generated about $6.2 million countywide annually and created a strong enough revenue source for education that a property tax increase would be deferred for quite some time.
“We are not looking at a [property] tax increase this year,” Hutto said. “I can only speak from year to year. This was not about a tax increase. This was about citizens having a share in this. This was about an additional amount of money with half of it going to education.”
Hutto said Wilson County Schools make up about 65 percent of the county’s overall budget. And he said the schools added 739 new students and several new teachers when classes started Aug. 1.
“We know if the growth keeps coming, there will have to be revenues added at some point,” Hutto said. “Our goal this year is to get a budget passed this year without a tax increase. That is our hopes. The education budget passed on to us doesn’t require a tax increase.”
He said many people he talked to preferred a sales tax increase largely because it’s the fairest tax around. He said everyone, including visitors to the county, pays sales tax while about 45,000 people pay property taxes and about 110,000 people pay wheel taxes in Wilson County. The commission can only adjust property taxes itself while sales and wheel tax changes require referendums.
The remaining amount generated from the failed tax increase would have been divided among the three municipalities – Lebanon, Mt. Juliet and Watertown – and the county based on amounts collected in each. Even the county’s portion of sales tax collected goes to education debt services to pay for capitol building projects.
Now that Wilson County voters spoke against the proposed sales tax increase, it’s Lebanon’s turn to give it a shot.
The Lebanon City Council passed a resolution at its Tuesday meeting that sets the dates for a special election with the sales tax referendum as the sole item on the ballot.
The resolution called for the city referendum to be Sept. 23 at a cost of about $25,000. Early voting will be Sept. 3-18.
“Because we initiated it, we have to go on and have a referendum,” Craighead said. “We have passed a resolution to set the dates. It will be the only thing on the ballot.”
Craighead said the half-cent sales tax increase would generate about $4.2 million annually if it’s passed solely in Lebanon instead of countywide. All of that money would go to Lebanon instead of a split with the schools unlike the county’s referendum on Thursday’s ballot.
“Of course, if they do, none of that money would go to education,” Hutto said. “On the flip side of this, the citizens of Lebanon would enjoy the things this would bring like nice roads and other amenities.
Craighead said the estimated funds generated annually for the city could mean about a 20-cent reduction in Lebanon’s 60.75-cent property tax rate. Property taxes were raised last year in Lebanon for the first time in more than two decades.
“I think it’s going to be an uphill battle, and I will be out there talking about this,” Craighead said. “I hope our other council members will join me in trying to get this pushed through.”
Craighead said the property tax reduction would be a $1.6 million annual reduction in tax revenues coming into the city and would leave money for a new fire hall and more aggressive paving throughout the city.
Craighead also called sales tax the fairest option since about 70,000 cars a day pass by Lebanon on Interstate 40, and those visitors stopping in the city to buy gas and other items would play a factor in who pays sales tax, not solely residents.
Wilson County Commissioner and Lebanon resident Annette Stafford said Friday she was disappointed the county sales tax referendum didn’t pass and looked for Lebanon’s proposal to see the same fate.
“I am extremely disappointed that measure didn’t pass,” Stafford said. “I was more disappointed as a property owner. I’m not saying we’re going to raise property taxes, but you have to pay for things some way.
“If Lebanon does it, and by some chance it does pass, I would be disappointed.”
If voters pass the city sales tax increase, it couldn’t be raised again without a change in state law. Either would push the sales tax rate to 9.75 percent, which is the most currently allowed in Tennessee. If Lebanon’s referendum were to pass, the county could opt in with another referendum to make the sales tax increase countywide, according to state law.