Vote on proposed $40 wheel tax exemption for Hawkins seniors postponed one month

Jeff Bobo • Dec 19, 2017 at 6:00 PM


ROGERSVILLE — The conversation became very heated Monday as the Hawkins County Budget Committee debated the feasibility of a resolution creating a $40 wheel tax exemption for seniors in the middle of the fiscal year.

Commissioners Michael Herrell and Fred Castle co-sponsored a resolution that makes anyone 70 years of age and older exempt from the $40 wheel tax increase that was approved by the full commission in June.

The resolution was up for consideration at Monday’s County Commission meeting, but an emergency Budget Committee meeting was held first.

Although everyone agreed with the spirit of the tax exemption to help seniors, it was the timing and feasibility of the resolution that was called into question.

Budget Committee Chairman Stacy Vaughan expressed concern about reducing the county's projected revenue in the middle of the current fiscal year, especially in light of the fact that no one knows exactly how many vehicles in Hawkins County are registered to people 70 and older.

Nicole Buchanan, county finance director, informed the committee Monday that the state comptroller's office contacted the county mayor's office and stated that if the tax exemption resolution passes, the county must determine how much revenue that will cost in 2017-18 and make general fund spending cuts to match that amount.

Buchanan gave the Budget Committee a very rough revenue loss estimate based on census figures.

Between 2010 and 2016, the number of people 65 and older in Hawkins County increased from 16.5 to 20.2 percent.

One dollar on the wheel tax generates about $53,000, and the $40 increase was going to generate $2.12 million in new revenue annually, or a monthly average of $176,676.

For estimate purposes, Buchanan used that 20.2 percent for seniors 65 and older, which would be about $35,687 of lost revenue monthly.

The earliest that the exemption resolution could go into effect would be Feb. 1, which would mean five months of lost revenue for the county before the end of the fiscal year, or an estimated $178,000.

"They said if this resolution passes it's a tax cut, so you have to have offsetting expenditure cuts because they will not approve a deficit budget" Buchanan said. "We're still under that order. They want to see the budget impact. They want to see a budget amendment which would reduce expenditures.”

At this point in the fiscal year, making spending cuts will be next to impossible because: 1. The property tax rate is set and cannot be changed through June 30; 2. A document showing contributions has been approved and published, so those cannot be changed; 3. Letters of agreement with all fee offices have been signed, executed and filed in their respective courts, so those expenditures cannot be changed or reduced.

"Do you have cuts to recommend," Buchanan asked Herrell and Castle. "You're just recommending reducing revenue."

Supporters of the exemption were adamant that the Budget Committee can find a way to make it work. Commissioner Rick Brewer suggested that the exemption be factored into the 2018-19 budget.

Castle said he would agree to postponing the exemption if the Budget Committee guaranteed that it would be included in the 2018-19 budget.

Vaughan said no one on the Budget Committee could support that with the information currently available.

The committee meeting ended following a heated exchange between Herrell and Vaughan.

During the commission meeting that followed, Castle and Vaughan agreed to work on a compromise at the Jan. 15 Budget Committee meeting.

Castle said he will present this resolution for consideration at the next commission meeting on Jan. 22.

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