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Claiborne County Mayor Joe Brooks met up with the school board to explain just why he would like to see a redistribution of the local option sales tax revenue. Brooks said during the November meeting that he is in favor of taking the school district’s portion of the unincorporated taxes for county benefit.

The 2.25 percent tax is evenly split between the county and the school system.

At some previous point, the county gave the unincorporated portion of the sales tax to the schools. However, Brooks claims the school district failed to use more than $1.533 million when working up its FY2023 school budget.

County government wants to have a more equitable revenue stream “thus reducing the county’s dependence on property taxes solely as a funding source,” according to a tabled resolution which will be addressed at the next commission meeting.

Brooks said the 30 cents hike in the property tax rate this fiscal year did nothing more than balance the budget. He said the county is looking at just what avenues it can take to generate alternate funds to balance the budget and keep the General 101 Fund solvent.

Last year, the school system received about 64.5 percent of all local option sales tax generated inside the county.

“By the (50/50 split), the county is actually losing about 14.5 percent of the revenue stream. That is putting us in a precarious position to where we only have one option every year and that’s property taxes,” said Brooks.

He said the county is seeing an increase of 5.9 percent in the local option sales taxes, according to the results from the first quarter.

“Consumer spending is not going down, it’s not flattening. It’s still on that gradual 8 percent glide that we saw last year. For the last five years, we’ve seen five percent up to ten percent with increased revenue sources.

“What that means is, if we move that over to the county side, Claiborne County would have realized about $621,000 for (the 101 General Fund) balance,” said Brooks.

He pointed out that, if the property tax ‘penny’ remains at its $67,000 value, the property tax hike would have been more than likely about 5 cents less this year – meaning the current tax rate would have been $2.25 per $100 of assessed value.

The school, he said, would still maintain its fund balance and would have kept its $589,000.

“We are still meeting, in this proposal, your maintenance of effort as required by the state of Tennessee,” said Brooks.

The schools would lose about one million dollars. This does not count the 5.9 percent increase showing on consumer trend, according to Brooks.

Meredith Arnold, Director of Schools, took exception to the proposal.

“So your resolution opts to take this effective Jan. 1 from our budget that we already have created. So you’re taking monies that we have in our pocket right now that I have allocated in my head and through conversation of us going toward things that we need.”

Brooks responded, saying the proposal does not affect the school budget.

“You all banked $1.5 million that was never even on your horizon for fund balance, bond payments or anything. That’s the money we’re talking about,” said Brooks.

Arnold said the money is allotted for projects that the school system is implementing and that the funds are “not unaccounted for.”

She reminded those present of the ongoing project to build a sewer system in the Springdale community for the elementary school that will also benefit surrounding residents and businesses. The system is badly needed to replace the obsolete septic installed in 1974 when the school was built.

Arnold said the schools are now responsible for the $1.2 million sewer project since the Claiborne Utilities District has pulled out of its contract.

She pointed out that the ‘numbers’ to justify the resolution were taken pre-COVID.

“We were getting $100,000 to $200,000 above maintenance of effort – not this $1.5 million. You need to know this is not what I would bank on. This is just a bad time to take it. I realize you’re in a need and you need it. But we need it, too,” said Arnold.

After the Springdale project, the school district will concentrate on the Powell Valley Elementary sewer line project, estimated to cost between $2 million and $3 million, along with the project to update the water/sewer at Midway School.

After more discussion, Brooks said revenues from the local option sales tax dollars would not pay for the necessary projects.

“So we’re going to have an additional property tax increase,” said Brooks. “The budget that you give to county commission is the budget amount that they work into their tax levy and appropriations. Last year, that appropriation had a $1.5 million surplus for the school side.”

The board spent more time talking through the issue which is expected to be addressed during the December meeting of the Claiborne County Commission. The resolution was tabled during the November commission meeting to be picked up during its next session.