Sullivan tax referendum proposal withdrawn by sponsor

BLOUNTVILLE — The Sullivan County Commission on Thursday endorsed creation of a new financial management system for the county. The move must be approved as a “private act” by the Tennessee General Assembly. The new system would bring the county school system’s accounting functions under a centralized system with the rest of county government. That’s a change. Today the school system has its own accounting staff. That staff would be moved from the Department of Education to the county’s Accounts and Budgets Office.

The resolution to adopt “The County Financial Management System of 2020” was approved by a vote of 22 yes, one absent and one abstained.

State auditors have for years recommended the county move to a centralized system. Sullivan County has operated under a system approved by state law in 1957, which permitted the school system to maintain a separate finance department. The resolution to change to a centralized system was introduced earlier this year to adopt the state’s 1981 financial management system. The resolution was amended in its entirety, to the locally crafted “County Financial Management System of 2020,” prior to the commission’s meeting on Thursday.

The new centralized system, which also would include the county’s purchasing department, would fall under the supervision of a newly formed Sullivan County Financial Management Committee. That seven-member body would initially include the county mayor, the highway commissioner, the director of schools, three county commissioners (chosen by commission vote), and the county’s finance director. The county’s finance director would “sunset” off the committee after the new centralized system and would only vote in the case of a tie.

If the State Legislature approves the private act, the whole issue will come back to the Sullivan County Commission, where it will be required to be adopted by no less than a 2/3 majority vote in its favor. That means at least 16 of the county’s 24 commissioners must vote “yes.”

Also on Thursday, sponsors withdrew a resolution seeking to allow voters to decide whether to equalize the local option sales tax countywide. In discussion of the issue in past meetings, and on social media platforms, some commissioners had said they would not vote for the resolution because it would be viewed as supporting a tax increase — even though it would have been voters who ultimately made the decision. Many said taxpayers already are facing a burden caused by the economic shutdown due to the COVID-19 pandemic and it is the worst time possible to consider a tax increase of any kind.

The referendum would have asked voters to approve increasing the local option sales tax rate to 2.75% across the county (for a total sales tax of 9.75%, including the state’s 7% sales tax). Currently, the sales tax rate (including the state’s 7%) is 9.5% inside the city of Kingsport and 9.25% inside the cities of Bristol and Bluff City and in non-incorporated areas of the county. The rate also is 9.25% inside the portion of Johnson City that is within Sullivan County.

That means an increase to 9.75% countywide (9.75 cents of sales tax per dollar spent on most items) would equal one half-cent per $1 spent in Bristol, Bluff City, Johnson City and non-city portions of the county (50 cents on a $100 purchase) and a quarter-cent per $1 spent inside Kingsport (25 cents on a $100 purchase).

According to state records, the 2.25% local option sales tax rate has been effect in Sullivan County, Bristol, Bluff City and the portion of Johnson City in the county since 1989, and the 2.5% rate has been in effect in Kingsport since 1992.

The local option sales tax rate already is 2.75% in these nearby counties: Carter, Hawkins, Greene and Unicoi. In Washington County, the rate is 2.5%.