• Concerned Citizens of Lakeland TN

Taxes and You!

What Does The Property Tax Bring In?
The total value of all taxable land in Lakeland in 2014 was $308,298,440. (In 2012, it was $329,076,055.)1  Using the current property tax rate of $1.40/100, this generates the following:

            Total Property Tax Revenue - ($308,298,440)*(1.40/100) = $4,316,178

Of this, $0.15/100 is required by State law to be used for school system operations. The City has designated the remainder as follows: 

Purpose

Portion of Property Tax

2014 Dollars

School Operations

$0.15/100

$462,448

School Debt/Capital Projects

$0.10/100

$308,298

School Bond

$0.55/100

$1,695,641

Non-School Capital Needs

$0.60/100

$1,849,791

Total

$1.40/100

$4,316,178

 

What Does The Local Option Sales Tax Bring In For Schools?
Along with the school vote, we also voted to increase the Local Option Sales Tax the maximum allowed by law (1/2 cent) to fund the school. In 2014, this generated:

            Local Option Sales Tax1 = $246,010

This money is dedicated for the schools and can be used for either debt reduction or operations.

 

How Much Will The School Bond Cost?
The bond specialist from PFM stated the bond will cost the city approximately $3,480,000/year at a 5% rate2. The City of Alcoa has recently issued bonds to finance construction of their new high school and their rates were 3.5-3.75%. With a similar financial rating, we could expect similar rates. This would bring the costs down to more like $3,000,000/year.

 

How Much Tax Revenues Are Available For School Debt or Building?
The total revenues the city collected using 2014 numbers and the new tax rate dedicated for the school system are:
            Total School Revenues for Debt = $308,298 + $1,695,641 + $246,010
            Total School Revenues for Debt = $2,249,949

 

How Large Is The Deficit?
Using the PFM stated annual payments, the deficit is:
            Deficit = $2,249,949 - $3,480,000
            Deficit = ($1,230,051)

Even allowing for a lower rate and lower annual payments, there is still a deficit:
            Deficit = $2,249,949 - $3,000,000
            Deficit = ($750,051)

This money has to be made up from somewhere. The BOC is betting on growth to staunch the loss from this. Although these deficits might not seem large, to our City, they are very substantial.

 

What About Growth?
A new $400,000 house generates just $650 in property tax dedicated for school debt. In order for property tax alone to cover this shortfall, we would need an additional 1200 to 1900 $400K homes to be built in Lakeland.

Local Option Sales Tax could also grow to cover some of this shortfall. A store like the new Sprouts will generate about $40-$60K/year for the schools3. Using this revenue alone to bridge the gap would take an additional 20-30 stores just like Sprouts.

 

Summary:
As shown, there is not enough revenue from the three recent tax increases to cover the bond payments under the current plan, so the money must be taken from somewhere else in the General Fund. Money taken from the General Fund means other projects will lack funding.  Projects like road repairs, bridge repairs, drainage, parks, police, sports fields, etc.  This lack of funds will reduce the City’s ability to attract residents and business, stunting growth for years to come.

 

[1] 2014 Lakeland Consolidated Annual Financial Report
[2] PFM Presentation on LSS website
[3] Sprouts 2013 10-K Report

 

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