ROGERSVILLE — What started as a Hawkins County Commission proposal Monday to offer a $40 wheel tax exemption to disabled seniors living in poverty quickly escalated into a debate on whether or not to do away with the last year's $40 wheel tax increase altogether.
Neither proposal was approved.
For the past several months, commissioners have debated a movement by commissioners Mike Herrell and Fred Castle to offer seniors an exemption to the $40 wheel tax increase that the county commission approved last year.
The resolution presented to the commission on Monday would have given a $40 exemption to property owners 65 and older (or qualified disabled property owners), who are actively on the state property tax relief program.
Aside from being 65 or older and disabled, qualified recipients would also be required to have a household income of less than $29,000.
An attempt to reverse the $40 wheel tax hike
Before the commission could begin discussing that resolution, however, Commissioner Darrell Gilliam made a motion to do away with last year's $40 wheel tax increase altogether beginning Oct. 1.
"This thing ain't been nothing but trouble and a thorn in our side since we done it," Gilliam said.
In response to Gilliam’s motion, Commissioner John Metz noted the goal of the commission is to place itself in a position where it can begin reducing the wheel tax gradually. But, he said, the county isn’t in that position yet.
Metz also cautioned against eliminating the $10 portion of that $40 that is set aside for funding public safety, which would place future fire department, EMS, rescue squad, and other public safety funding in jeopardy.
"Cutting it out cold turkey is certainly not the answer," Metz said. "You're going to create more problems. Exempting groups is something that there's already been a standard established for, and it's being done all over the state."
Why not cut the wheel tax now?
The obvious concern about eliminating the $40 wheel tax increase was the reduction of about $2 million in annual revenue that would have to be made up in the 2018-19 budget by dipping into savings.
Between Oct. 1, 2017, when the $40 wheel tax increase was implemented and June 30, it generated about $1.4 million overall, including $1.081 million for the general fund and $360,411 for the public safety reserve.
Currently, Hawkins County is projected to end the 2018-19 fiscal year with a $3.7 million reserve fund balance. At this time last year, the commission was dealing with a $2 million budget deficit.
Budget Committee Chairman Stacy Vaughan noted that the current proposed 2018-19 budget shows a $150,000 deficit that will be made up through savings.
That's a sustainable number, but taking $2 million from savings would put the county in the same position it was in last year, Vaughan noted.
"Then next year your new mayor, your new commission, is going to be hit with either implementing a new wheel tax or implementing another property tax," Vaughan said. "The funds will not be there to continue to dig into unassigned fund balance, and the growth is not there to support what you're going to lose."
The motion to eliminate the wheel tax required a two-thirds approval, or 14 votes, and failed by a vote of 8-10. Commissioners who voted yes were Dwight Carter, Eugene Christian, B.D. Cradic, Fred Castle, Danny Alvis, Darrell Gilliam, Robert Palmer and Mike Herrell.
Those who were opposed were Syble Vaughan-Trent, Jeff Barrett, Greg Fletcher, Stacy Vaughan, Linda Kimbro, Dawson Fields, Joe McLain, Glenda Davis, John Metz and Nancy Barker.
Herrell argues for his exemption resolution
As for the original $40 exemption resolution, Herrell noted that it will only cost the county about $50,000 in 2018-19.
"If we pass this, we're only talking about 1,240 people this is going to affect. We know there are people in this county who are not on this property tax relief," Herrell said. "If they go sign up tomorrow, it takes one year for them to get this tax relief. They have to be signed up right now to get the $40 wheel tax relief. If they're not signed up, there's no way they can get it right now. I'm not going to say next year it won't be 1,500. But they're going to have to sign up for the property tax relief just to get the whee tax (exemption)."
Herrell added, "I've heard commissioners say, ‘They're probably going to get it for their grandkid.’ They probably can get it for their grandkid, but they won't get it for themselves. You're only going to get one tag per household. ... By going this route it gives us a true number how much we're going to need each year to fund it. ... Right now we've got 191 disabled on it, we've actually got 1,049 seniors on it, and that's a total of 1,240.
The main argument against the exemption resolution was that it doesn't help people who live on rental property, or younger working people who are struggling financially.
The exemption resolution skips other groups in need
"Before I can vote yes on this, and please don't get me wrong, but the older people are not the only ones that needs help in this county," Gilliam said. "I have a hard time driving through my district seeing people living in storage buildings that don't own property, and have to pay $96 (license plate fees) to drive back and forth to work."
Gilliam added, "We're trying to help certain people out, which I'd love to do it, but we're leaving some people behind that I know personally need more help."
Herrell said the intent of the resolution was to offer relief to people who might find themselves having to choose between renewing their tags and buying medicine or groceries.
This resolution also required a two-thirds majority of 14 votes, and failed 10-6 with two abstentions.
Those in favor included Trent, Cradic, Castle, Alvis, Fletcher, Vaughan, Fields, Barker, Palmer and Herrell. Those opposed included Carter, Christian, Barrett, Kimbro, Metz, and Gilliam, with McLain and Davis abstaining.
The commission is expected to vote on its final 2018-19 budget when it meets again in regular session on Aug. 27.