Often when local government officials are faced with tough financial decisions, they duck the prospects of a property tax increase by floating a sales tax hike.
Johnson City’s latest sales tax pitch came at Monday’s joint budgetary session of the City Commission and the Board of Education as an answer to school safety funding needs. Commissioner Ralph Van Brocklin described the quarter-cent hike as a more consistent and robust funding source than pulling from the city’s general fund.
Unlike property taxes, sales taxes don’t require elected officials to take a political hit. They can pass the buck straight to the voters, since it takes a referendum to increase the local option sales tax in a Tennessee city, county or both.
Sales taxes can be easier to swallow than property taxes for affluent voters, since they have more discretionary spending power than lower-income residents. Tennessee already has the dubious distinction of the second-highest combined state and local sales tax in the U.S. at nearly 9.5 percent on average, disproportionately affecting citizens with the least ability to pay. The Legislature thankfully reduced the state portion of the sales tax on food from 5 percent to 4 percent beginning last July, but the full local portion remains.
In most of Johnson City, that quarter-cent hike would take the local rate from 2.50 percent to 2.75 percent, the state-mandated maximum, moving the combined rate to 6.75 percent on groceries and 9.75 percent on everything else. Going it alone, Johnson City would generate an estimated $4.5 million to $5 million in annual revenue for its general fund. Were Washington County to join the referendum, the city’s share would dip to roughly $2.25 million. That is if the economy remains strong. Sales taxes are among the least consistent sources of revenue when times are tough and spending goes south.
Johnson City’s sales tax discussion comes as schools across the nation try to address improvements toward preventing tragedies like the recent mass fatal shootings in Florida and Texas. The City Commission already agreed Monday to add $240,000 in recurring funds toward school security measures.
Few would argue against the need for better security in schools, given that children’s lives are in the balance. It seems politically expedient, though, to justify a regressive sales tax increase worth millions each year in the name of safety.
Just six years ago, both Johnson City and Washington County came knocking on citizens’ wallets in hopes of maximizing the local option sales tax in the name of funding for school building projects. They heard a resounding “no” from voters, as the referendum failed by nearly 3,000 votes. The city got a similar message when it tried to hike the tax to fund a performing arts center some 20 years ago.
Johnson City and Washington County already charge people a lot to shop and fill their pantries here. If school safety is indeed the goal, city commissioners should pony up, take the hit and choose a less regressive, more equitable way to garner the funding.