The 1/2 Cent Sales Tax Increase – The Reason to Not approve it

There is much debate currently raging in regards to the proposed 1/2 cent sales tax increase for Shelby County. And rightly so… This referendum is ill-timed and very premature. Let me paint the picture for you.

The Shelby County School Board is staring down the barrel of at least a 60 million dollar deficit next year based upon the TPC plan. If all recommendations are accepted by the TPC plan, the gp would be 60 million, give or take a million. Before the recommended cuts, the gap is 150 million dollars.

The Shelby County School Board is looking at raising 60 million in new revenues. The 1/2 cent sales tax would yield around 30 million dollars. However, that leaves a gap of 30 million dollars.The next logical source of revenue will be a countywide property tax increase. The county commission can only raise the county property tax rate 10% in one year which would equate to a .40 cent tax increase. .40 cents would yield around 64 million dollars for education.

In all, the county   the 1/2 cent sales tax increase and a .40 cent property tax could raise around 98 million dollars for education if they so choose. To cover the 30 million dollar gap, the countywide property tax will have to be raised around .19 cents.

So voters must understand that they will face at a minimum and double tax increase in the county. Half from a sales tax and half from property taxes. Layered on top of this is the fact that sales tax proponents are advocating that the sales tax increase will got to fund universal pre-k. I can tell you that this is not true.

By the way, over the next 5 years our funding gaps get worse as key provisions of Norris-Todd require that we level salaries, etc. We also have key federal dollars and state dollars expiring that support pre-k.

So the question that I am asked is: Why should we not approve the sales tax? Because it undermines the unified board’s job to create a lean, effective district. We will see subsequent property tax increases every year until we figure out how to balance our budget.

And I believe that I have a solution for long-term solvency without a tax increase. We can close the funding gaps and fund pre-k without a property tax and sales tax increase. Here is how:

We start by adopting all recommendations in the TPC plan. However, instead of just firing staff, we create a broad district wide buy-out program that applies to everyone. It would be voluntary would target particular pockets of the work force. Mostly highly paid, long-tenured, and retirement ready administrators and teachers. This would allow us to drastically reduce our salary and benefit costs and allow for some fresh new faces in the district. Some positions will not be backfilled and some would be.

Let me provide an example:

We have a long-tenured professional who is making 80K per year loaded. If they took the buy-out, we could provide for examples a severance of 30K. If we brought on a new teacher for 50K loaded, we could save 30 K per year. If we did that with 500 people, that is a 15 million savings beginning year 1. If we decided not to backfill, it would be a 40 million dollar savings. We would create a  buy-out fund and pay severance out of the buy-out fund. This would be a collaborative effort between SCS, Memphis, and Shelby County Commission.

We also have a very heavy central administration that will need to be cut as well. Many administrators making 130-160K a year. All duplication of efforts.

The reality is that we have not gotten creative to fix our funding issues. And we need a long-term, sustainable model so we do not need subsequent revenue increases.

However, if this 30 million dollar sales tax passes, we now have no incentive to drive efficiency.The best way to drive us to meet our budget is to put us in a position to have to do it. If you do not, you will see tax increase after tax increase.

And none of us what those…

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