Sullivan would need $56-plus wheel tax to match revenue from 27-cent property tax hike

BLOUNTVILLE — If Sullivan County commissioners were to institute a wheel tax in the county to raise the same amount of revenue as a proposed 27-cent property tax increase, it could be about $56 per vehicle — not counting any fee tacked on to cover administration of the new program.That's based on about 168,000 vehicles registered in Sullivan County — a figure listed for 2013 in a statewide roundup of motor vehicle registrations published by the University of Tennessee's taxpayer-funded County Technical Assistance Service (CTAS).Due to time constraints, it is unlikely a wheel tax could become a serious option for the county for this budget year, which began July 1.The 27 cents added on the tax rate is projected to bring in about $9.4 million.During a budget development discussion this past Wednesday, County Commissioner Bill Kilgore spoke against an increase in the county property tax rate.Kilgore said most people who have contacted him on the issue in recent days have asked about creation of a new tax instead — a wheel tax.Kilgore said a wheel tax would lessen the tax burden on homeowners — especially the elderly and others on "fixed" incomes.Kilgore said some of them don't drive the roads or have children in schools and they've told him they just can't take a property tax increase.Kilgore mentioned Greene County's use of a wheel tax as an example of a nearby county instituting such a program. Hawkins County also has a wheel tax, while Sullivan, Carter, Unicoi and Washington counties do not.Kilgore did not formally propose a wheel tax. But it is not the first time he's brought it up.At a budget meeting several weeks ago, Kilgore tried to steer discussion toward looking for more revenue sources than just the property tax."It's not always going to be set down on the property owners to foot the bill," Kilgore said then. "You can let somebody else foot the bill. Somebody that's got five cars, if they can afford five cars, can they afford $50 a car as much as they could another $500 on their property tax? There's more ways to go at it and get different people involved in making the payments that we have to have to run this county than just property taxes. I am not recommending either one of them or none of them. But there's more ways to look at the revenue side than just saying we got to raise taxes on property."Commissioner Eddie Williams, longtime chairman of the Budget Committee, answered Kilgore back then by saying a property tax typically makes up the lion's share of revenue for local governments for a simple reason."The tax that is spread among more people and has less impact on a particular group of people is the property tax," Williams said. "Everybody pays property tax. Somebody said 'renters don't pay.' People that rent do pay property taxes because (landlords) add it on to what (they) charge them. So, that's why the property tax is used so broadly — it is spread among more people."Williams also cautioned that in his opinion adding a new tax just means something else that could be raised in the future.According to the Tennessee Comptroller of the Treasury's office: Sullivan County's fiscal year 2014 tax base totaled over $3.7 billion; Greene County's tax base for the same period totaled about $1.3 billion; and Hawkins County's tax base for the same period was about $1.05 billion.Sullivan County's property tax rate for the fiscal year that ended June 30 was $2.3054 (per $100 of assessed value.If the Budget Committee's recommendation is approved by the full Sullivan County Commission that will increase to $2.5754 this fiscal year.A 27-cent tax increase equals $101.25 in new taxes on a home valued at $150,000 (150,000 X .25 = 37,500/100 = 375 X .27 = 101.25).County taxes are levied based on a percentage "assessment" of property's "appraised" value as determined by the county property assessor's office.Residential property is assessed at 25 percent. Commercial property is assessed at 40 percent.In the example above: the $150,000 represents the property assessor's appraisal of a residential property; and the $37,500 represents the 25 percent assessment — which is divided by 100 because the county property tax rate is "per $100 of assessed value."Trading a 27-cent property tax increase for a $56-plus wheel tax would cost a homeowner with two vehicles $112 or more per year — perhaps less than a 27-cent property tax increase, if their home is valued at more than about $165,000.So if your home is valued (by the property assessor on your tax bill) at less than $165,000 and you have two or more vehicles, you would not be better off.If you own only one vehicle, your potential to pay less with a $56 wheel tax, compared to a 27-cent increased in the property tax, would begin if your home is valued (by the property assessor on your tax bill) at more than about $82,500.The Sullivan County Commission could vote on the budget and a tax rate on Aug. 17.Contact information for individual county commissioners is available at www.sullivancountytn.gov.