Nothing More Taxing Than Complex Public Financing Smart…

1 Апр 2015 | Author: | No comments yet »
car Smart Crosstown

Nothing More Taxing Complex Public Financing

is quite as confusing as government and that’s never been than now.

There to be big numbers everywhere, and judging public debate and comments on The Appeal articles, there is big confusion.

There are times even insiders in government get by the blizzard of numbers, funding legal, and potential uses. why it’s no surprise that to the Editor use operating and capital as if they are interchangeable or suggest money for The Fairgrounds could be on schools instead.

Of course, can’t be.

So, let’s have a of the taxes that are most in the news or in public discussions.

A Tax, There A Tax

First and there are property taxes by all Memphians who own real property. city and county governments heavy dependency on property which is the largest single of funds for city and county (about half of the county’s tax rate goes to schools).

are sales taxes collected time we make a purchase in – 7% of it goes directly to Nashville and the local option sales tax here. Half of the local sales tax goes to the general of City of Memphis government and the half goes to public

Things get complicated outside of In the unincorporated area of Shelby the local options sales tax is between county government and education.  In the municipalities, 2.25% of the option sales tax is split the government of the town where it is and public education, but the .5% sales tax approved by voters in each of the goes to that town’s which pledged that the would be appropriated to their school district.

There are the taxes that are added to the for rooms in Memphis and Shelby hotels. Shelby County has a hotel-motel tax of 5% and City of Memphis has a tax of 1.7%, so people staying in hotels pay an extra 6.7%.  The hotel-motel taxes are part of the of funds that pay for the bonds for and beginning in 2017, city taxes will do the same.  In the hotel-motel taxes fund the of Memphis Convention and Visitors

Alphabet Soup

There’s the Development Zone (TDZ), one of takes in most of downtown to pay for the Cook Convention Center and The redevelopment and another zone is proposed for the Fairgrounds area to the Fairgrounds redevelopment. In the TDZ district, the increase in sales taxes .5% of the state sales tax for education) is and used to pay off bonds issued for a TDZ project.  If we didn’t have projects, the state sales would instead go to Nashville and about 25% of it would find its way to Shelby County and most of it be spent across the rest of

But it’s too simple to say that all in sales taxes go to the TDZ project, as critics of the TDZ projects complain.  once the baseline of present taxes is established, it is adjusted year, which means the baseline is increased by the percentage of for sales taxes countywide.  the amount above that that is collected for the TDZ.

tax that captures incremental is Tax Increment Financing (TIF), but of sales taxes, it collects taxes.  TIF collects increases in and county property taxes take place following improvements in a specified area. A is set and anything above that can be captured to pay for public improvements. has two TIF districts – one in Uptown and another for the Row project.  TIF is a financing vehicle widely in Chicago and often in (which uses it instead of out tax freezes, or PILOTs).

The Payment-in-lieu-of-taxes (PILOT) program property taxes at the amount of the property, and as the property is improved and its increases, it continues to only pay at the old unimproved appraisal amount.  and Shelby County have out more tax freezes than all areas of Tennessee combined for a amount waived of about million a year.

PILOTs are by the Industrial Development Board as an for new jobs and business investment, and its offers tax waivers of up to 90% of City of personal and real property and up to 75% (25% is exempted for education) of County personal and property for a maximum of 15 years.  Center Revenue Finance Corporation of the Downtown Memphis Commission) taxes for downtown projects, and as shown with a PILOT for 20 for Sears Crosstown, it does not its tax freezes to 15 years.

And There’s

There’s various incentives by the Center City Commission and from its special downtown tax and

There’s the state sales tax that collects the sales from the sale of tickets, and merchandise at the games of professional teams. This funding was as one of the sources of money to pay for the bonds at Forum and AutoZone Park.  The tax can only be spent to pay for professional facilities.

There’s the special car tax for vehicles rented at the airport and its are designated for FedExForum.

And these are a few of the taxes collected and spent by our Some taxes can only be for certain things – such as a center, the Fairgrounds redevelopment, an or street improvements. As a result, are not interchangeable, but as they have here at The Pyramid and hopefully at Park, they allow to proceed without using any taxes.

car Smart Crosstown

As a result of the complexity of the tax it’s little wonder people ask why can’t the money spent at The Pyramid can’t be on schools, or fighting crime, or

It’s Not The Same

The same of argument was heard when the Forum was approved, but the truth is the taxes being used to pay for of these projects can’t be on education. By law, they can be spent for specific projects a public tourism-related facility or a sports team.

Even if they wanted, and county governments could not redirect revenues paying for The or FedExForum to schools, whose funding normally comes county property taxes.

Or another way, even if the law did allow $100 million these projects to schools, it not be $100 for its operations.  It would be like $7 million, which is the annual payment for $100 in bonds.

In recent days, we one commenter who said that the $15 for Sears Crosstown should be spent for teachers’ salaries.  But are part of the operating budget for County Schools and the $15 million for Crosstown were capital In other words, the $15 million in funds amount to about $1 a year in bond costs.   So if the Sears Crosstown money was to schools, it wouldn’t be $15 million but be $1 million.

Conventional Thinking


Well, what the suggestion about a new convention

It’s estimated to cost at $500 million. Some opponents of the cut in school funding said that if city could spend that money on a convention center, it give Memphis City the $56 million that was cut.

Like The Pyramid (and Forum, for that matter), the sources that are available to pay for a new center – TDZ, TIF, and taxes – cannot be spent on

Such is the intricacies of putting the financing for major projects in government, and because of the complexities, next to impossible for the public to the facts about big ticket particularly the fact that in spite of starting several projects, is spending very in city property tax funds.  .

car Smart Crosstown
car Smart Crosstown
car Smart Crosstown

car Smart Crosstown
car Smart Crosstown


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