The Post About Taxes And Spending Cuts and County Debt

I’ve been asked the question in a couple of places about whether I would consider raising property taxes. I have said I think it’s irresponsible for a County Commissioner (and Mayor) to take a pledge against raising taxes. You can never tell what needs the County might have in the future and the options are limited for what the County government can do to make sure the budget is balanced every year. I mean, Knox County is not the federal government, which can run an annual budget deficit.

So, when the question has been asked about taxes, I have answered generally that I would consider raising property taxes, under the right circumstances. But I wanted to write a longer piece on this subject, because it’s too easy to demagogue the issue of raising taxes. I want to make it clear where I stand so that no one can mischaracterize my position. And I suspect this may come up in my race, since my newly minted Republican opponent has said he “will not support an increase in property taxes.”

First, I pledge to vote no to any increase in sales taxes. The tax system in Tennessee in general and in Knox County specifically is regressive. There is no state income tax, which can be made progressive and impose a lower level of taxation on the people with lower income. That’s what we have at the federal level. Sales taxes hit hardest the poorest among us, because they have to spend a larger percentage of their incomes on items that have a high sales tax rate. I would prefer to see sales tax go down if taxes could be lowered. I will not vote to raise sales taxes.

Second, I place a priority on ensuring full funding for schools, to include teacher pay increases, walkability projects (sidewalks and greenways), and assistance programs for the indigent and needy. Last year, the Mayor’s budget included a cut to the indigent care program. I will fight against any such cuts in the Mayor’s budget when I am Commissioner. I’ll get to raising property taxes in a second, but to my mind, there may be other areas ripe for cuts that should be considered before cuts to the programs I mentioned above. I recently spoke out on a $200,000 appropriation for the Knoxville Chamber’s “strategic vision.” If elected, I would closely review the Mayor’s budgets for those kinds of appropriations which could be cut before programs like I described above. I pledge to look into balancing the budget in this way before I would consider voting for a property tax increase.

But, third, it may not be possible to balance the budget and fully fund priorities without considering a property tax increase. Now, here’s where it gets wonky. And I encourage you to read this article from the Compass where they discuss this issue in some detail. Mayor Jacobs has pledged not to increase taxes. If you’ve read this far, you know I think that’s irresponsible. And has led to a misguided goal of balancing the budget on spending cuts alone. Knox County has not had a property tax increase in 20 years. In fact, because of the Tennessee Certified Tax Rate law, the property tax rate has gone down from $3.32 per $100 of assessed value to the current $2.12 per $100. Property values have gone up and taxes have stayed essentially the same. Sounds great, right? Well, the problem is that Knox County has grown significantly over the last 20 years. And the revenue from property taxes, as a percentage of the budget has gone down. So, that means you either borrow (more on that in a sec), cut spending or find other revenue. Now, I don’t want my taxes to go up any more than any other homeowner. But at some point, running a county of about 460,000 people starts to get expensive. I don’t know if that point will come in the next four to eight years when I could be in office. But I believe the politicians, like my opponent and the Mayor, who pledge not to raise taxes are doing us all a disservice. So, here’s my pledge. I will do everything I can to ensure the Knox County budget is not balanced with spending cuts to essential programs. I will look for any reasonable option to balance the budget that does not include property tax increases. If I believe a property tax increase is necessary to ensure programs are fully funded, though, I will advocate for the lowest possible property tax increase that will make sure the programs are funded and the budget balanced.

At this point, I should note that I realize that I would be one Commissioner among 11. And the budget is put together by the Executive (the Mayor and his staff) for review and approval by the Legislative Branch. I can strenuously object until the cows come home and I may be the lone voice and no vote on many of these issues. But if that’s the case, so be it. I pledge that I will not be afraid to be the only one to speak out against the Mayor’s budget or to be the sole “no” vote on the Commission.

Finally, Knox County seems to have a sizable debt burden, which part of the budget has to account for. The County seems to have a good rating with the credit rating agencies. And there is theoretically no limit to the amount of debt the county can take on for its larger projects and needs. With new debt for the County, I would take a measured approach. I am neither categorically against new debt if it serves the priorities I think the County should have, nor do I think it’s a good idea in and of itself to finance new County spending with debt, as opposed to finding appropriate spending cuts or raising property taxes. New debt should not be a crutch for the Mayor or the Commission to avoid having to deal with the question of raising property taxes. I pledge not to make a specific pledge with regard to new debt or paying down old debt. I will study the budget presented by the Mayor and draw my conclusions at that time. I will pledge to follow the guidelines I have set forth in this post in deciding how to speak out and vote on this important issue.

Published by Todd Frommeyer for Knox County Commission

Retired Air Force JAG, former Navy Russian linguist, former consumer financial regulator, political junkie

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