Scott Broden, The Daily News Journal, January 8, 2018
Lawmakers should allow Rutherford County development taxes to increase to help pay for schools, roads and other public services, an official contends.
“Give us some alternative to raising property taxes, which none of us want to do,” County Commissioner Jeff Phillips said recently to five lawmakers who represent Rutherford in the Tennessee General Assembly. “Schools are being built faster than we can pay for them.”
Those in the housing industry, however, say that increasing the existing development tax of $1,500 per house or apartment will lead to consumers paying more to live in a new home even if they’re moving within the county.
“We’re just low-hanging fruit,” said John Floyd, a founder of the home-building company Ole South Properties in Murfreesboro. “Why should somebody who buys a new home have to pay something that somebody buying an existing home doesn’t have to pay?”
Commissioners raised property taxes by 7.8 percent in 2015 for schools, which was the highest of five hikes dating back to 2006. The development tax generated $6.2 million in the past fiscal year that ended June 30. That’s well short of the money needed to build a school, such as paying for the $70.8 million construction cost for a Rockvale High that’s scheduled to open summer 2019.
Housing industry generates sales taxes and jobs, Floyd says Floyd said he understands the stress county commissioners face with property taxes.
“I wouldn’t want their jobs,” said Floyd, noting that commissioners are unable to pass the burden of funding schools onto people moving to Rutherford County through a development tax in all cases. “When a family moves into an existing house that was built 25 years ago or 10 years ago, it has the same effect.”
He’d rather see lawmakers allow a transfer tax on all real estate transactions.
“That’s the most fair tax,” said Floyd, who noted how a transfer tax would work just like sales taxes work every time a car is sold. “The revenues from a transfer tax could be a the saving grace for this county.”
New homes generate significant sales taxes for lumber, appliances, flooring and many other materials, Floyd said.
Housing construction also creates work opportunities for many people, said Floyd, who estimates that Ole South projects are providing about 2,700 jobs at a rate of 3.5 per new home.
Sparks urges school vouchers, and Rudd wants PBA to build schools
State Sen. Bill Ketron, R-Murfreesboro, talks about his plans to sponsor legislation that would place a two-year moratorium on standardized public education testing.
Commissioners Phillips, Doug Shafer and Rhonda Allen also told the lawmakers they worry about the county having to raise property taxes to cover school operation costs to pay for teachers and other expenses.
“We need some means we can draw on,” Shafer said.
State Sen. Bill Ketron, R-Murfreesboro, told the commissioners to craft a resolution if they’d like to see laws adjusted for development taxes to raise funds to pay for schools and other public services.
“It’s kind of scary to look down the road,” said Ketron, who agreed brick-and-mortar school projects will continue to put stress on the county.
State Rep. Tim Rudd, R-Murfreesboro, suggested money could be saved by allowing the county’s Public Building Authority to oversee school construction again.
The PBA oversaw the construction of Blackman High, which opened in 2000 without an expensive indoor pool like the ones at the other existing large high schools at the time.
State Rep. Mike Sparks, R-Smyrna, contends money on school construction could be saved by encouraging school choice, such as supporting vouchers the government could provide to families to help pay for private school if legislation can be passed.
Local school boards oppose vouchers.
Reach Scott Broden at email@example.com or on Twitter @ScottBroden.