From the Tennessean:
People aren't building houses in Williamson County like they used to. But you wouldn't know it from looking at the schools.
Annual revenues from the county's privilege tax on home construction have shrunk from about $10 million to $1 million since 2007. Yet Williamson opened three schools last summer and is building two more to open later this year.
"The last couple of years, we've gotten a lot of new students because of the economy," said David Coleman, the county's budget director for almost 16 years. "Some of them are pulling out of private schools."
Now the county, growing but also suffering from the economic downturn, is thinking about how it will pay for that growth. Its answer might be a tax increase.
As they try to keep pace with infrastructure needs, employee pay raises, benefit costs and other demands while worrying that the state could eliminate a key revenue stream, local governments — even in relatively affluent places such as Williamson County — find themselves in an environment that could call for raising taxes.
Mt. Juliet is trying to figure out how to obtain more fire protection at a time when Wilson County, which provides it, says it can't afford to do anything more. Belle Meade and Brentwood are worried about losing an important source of revenue if the General Assembly kills the Hall Income Tax.
Bert Chalfant, a Williamson County commissioner who has represented part of Brentwood for the past 25 years, said talk of a tax increase was "far too premature." But he acknowledged the pressures of growth.
The Williamson school district regularly builds schools in an attempt to accommodate an ever-expanding student body, which has grown by almost 20 percent in the past five years.
"We are a very desirable place to live," Chalfant said. "We've shown continued and steady growth. Growth requires occasional adjustments as it comes to big infrastructure."
Some other counties have said tax increases are off the table as unemployment rates remain high and residents continue to carry the burden of the recession.
Metro asks for cuts
"We're going to function within our revenues and put together the best budget we can," said Metro Finance Director Rich Riebeling, one of Mayor Karl Dean's top aides. "It's not the right time to raise taxes."
Riebeling asked Metro department heads Thursday to present budgets this spring based on 3 percent cuts, though some departments won't be reduced that much.
He said Dean wants to fund education and public safety at current levels or better.
Metro's sales tax revenues haven't grown as much as Dean's administration would like. The May flood's impact on operations at Opry Mills mall, which remains closed, and the Opryland hotel were significant.
The city has reduced the size of government by 435 budgeted positions and more than $46 million over the past three years, according to Riebeling's memo to department heads.
Tax talk, fire coverage
At a recent meeting of the Williamson County Commission's tax study committee, Coleman said adding 23 cents to the property tax rate — which is now $2.31 per $100 of assessed value — would be necessary to meet the county's debt service requirements in 2011-12.
At the same time, the school district's finance director, Leslie Holman, said an additional 24 cents could be needed to operate new schools, raise pay for teachers and cover increases in health insurance.
Coleman said the county could raise the property, sales or wheel taxes. Every penny added to the property tax rate would generate about $685,000 for the general fund — $15.75 million from 23 cents — or about $615,000 for schools, with 24 cents producing $14.76 million.
A half-cent sales tax increase, which would require cooperation from cities like Brentwood and Franklin, could bring in $7 million to $8 million annually, Coleman said. Every $5 added to the wheel tax, which is now $25, would generate $800,000.
The county commission and school board will hold a joint meeting to talk about the situation on Feb. 14.
"We're looking for some guidance," Coleman said.
To the east, Mt. Juliet is wrestling with the need for more fire protection for an area that has grown from a small farming community into a city with multistory hotels and apartment complexes. But Wilson County Mayor Randall Hutto recently told Mt. Juliet that the county was stretched to its limit.
Mt. Juliet Mayor Linda Elam said the city wouldn't necessarily need to raise taxes to address the problem, though it might incur additional debt. Mt. Juliet could build a fire hall on its own for $1 million to $4 million and turn it over to the county to operate, or it could partner with Lebanon on a new facility.
Meanwhile, state legislators are talking again about eliminating the Hall Income Tax on dividends and interest. The state collected $172 million from the tax last year and sent $62 million back to counties and cities.
Brentwood City Manager Mike Walker said the tax brings in about $2 million a year, more than 6 percent of a $30 million budget. If Brentwood lost that money, it would need to raise the property tax rate 10 cents or start making cuts.
"It's a significant amount," Walker said. "You're faced with decisions relative to service delivery. We're just trying to live within our means. We've got enough challenges already."
The Williamson County city of about 36,000 people includes 2,915 residents who pay the Hall Income Tax.
Debt restructured
Other communities say they're in good shape for now. Rutherford County, which raised the property tax rate by 17.5 cents two years ago, doesn't expect to raise it again for the next fiscal year, which starts July 1, Finance Director Lisa Nolen said.
In Hendersonville, the budget is likely to be flat, with no tax increase and no changes in expenditures, said Don Long, an assistant to Mayor Scott Foster.
Sumner County has one of the region's lowest tax rates, but it also has adequate reserves and is planning to restructure some of its debt while interest rates are low, County Executive Anthony Holt said.
"We have plenty of challenges, like all communities," Holt said. "We're growing. But I don't anticipate a request for a tax increase.
"We've tried to take the opposite approach and make cuts where we need to. It's tough to ask citizens to make a sacrifice if the government's not making one."
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