Shrinking Property Tax Base - And Response (2)

Wednesday, May 17, 2017

It is municipal budget time once again.

 

Hamilton County government has started the budget shortfalls and capital needs cry for additional funding.  

 

I support funding essential services, let me repeat essential services, in government, such as public works, emergency services, and public schools.

 

Hamilton County is mandated by Tennessee Code Annotated to provide broad public services that are core to public interest, and are a constitutional obligation. I understand Hamilton County government’s need for additional funding to operate. Hamilton County is the hub or core of government services.  

 

The cities exist by optional charter approved by our state legislative. If a city relinquished their charter, the county would be constitutionally obligated to expand emergency services and public works operations into the cities.

 

In both cases, county government and cities must fund services.

 

If funding of essential services is paramount, why do our local governments intentionally shrink their own property tax base? 

 

I equate the actions of our county and city governments the same as a transportation company that would cut their own tires. That is precisely what county and city governments have carried out over a 12 year period through the windfall issuance of Payment in Lieu of Taxes, called PILOT.

 

A local financial watch group, ATM, has studied the financial impact to our property tax base for years, and produced the most comprehensive and analytical reports regarding impact of PILOT on we the people.

 

It is undisputed that both Hamilton County government and the city of Chattanooga have arbitrarily approved every PILOT placed before their elected bodies without any accounting of total impact or even tracking.  

 

Helen Burns Sharp compiled the first PILOT accounting and measured impact.

 

Sharp and ATM cataloged and mapped every PILOT to establish the financial impact on our property tax base.

 

Prior to Sharp's work, the county and city were arbitrarily approving every PILOT without any measure of impact to the property tax base. After Sharp presented her data to city government, all of a sudden local government data bases sprung like fescue grass in the spring.

 

Helen Burns Sharp and ATM states the following,

 

“In 2016, PILOT agreements resulted in some 15,000,000 dollars of lost revenue to the city and county. An " in-lieu" agreement typically lasts at least 10 years. $375 million is a conservative estimate of the amount of tax revenue that will not be collected from benefitting companies while these existing agreements are in effect. The City gets almost 60 percent of its general fund revenue from property taxes.”

 

Think about that, last year, in 2016, our city government operations lost $15,000,000. Then, consider this, the PILOT approvals continue and are growing in issuance. ATM reports that there are two types of PILOTs our local governments are issuing, 1) Jobs PILOTs through the Chamber of Commerce for their members, and 2) Housing PILOTs. It is very rare to see a PILOT denied.

 

The property tax base for the city and county continues to shrink each year due to PILOTs, or tax exemptions being issued to corporations.

 

What does this mean? The people that are subject to property taxes will pay more. Each time a parcel leaves the tax base with improvements, the people remaining in the tax base fund their services.

 

Each time a PILOT is issued we all get a property tax increase.

 

Funding of local government services require X number of dollars plus increases due to inflation to operate. When a property is improved and not paying property taxes, the PILOT property still receives municipal services, but does not contribute proportionally to the property tax base.

The city of Chattanooga receives 60 percent of its revenue from property tax income. This is a huge issue.

 

The ATM group has published a report and map that is staggering. Of course, the ATM is a citizen group and gets little notice of their findings from media. If the Chamber of Commerce had these findings, it would have been on every media outlet.

The ATM map is huge news.

 

The ATM group mapped all the PILOT lands that are exempt or partially exempt from property taxes for sometimes 15 years or more. The ATM study concluded that 26.9 percent of the land mass in the city of Chattanooga has PILOT property tax exemptions, and another 1.7 percent has partial city property tax exemption. Those are staggering numbers considering that 60 percent of the city of Chattanooga’s revenue is from property taxes, according to ATM.

 

Hamilton County has the same situation, since the properties in the city are subject to Hamilton County government taxes. Further, I would encourage ATM to map Hamilton County’s PILOT irresponsibility. I would like know how much damage county government has done to the unincorporated property tax base.

 

Our local governments have x acres of land area to generate property taxes from, and they are rendering their lands property tax exempt for sometimes over 15 years.

 

The city of Chattanooga has x acres and ATM’s extensive data clearly indicates the city has property tax exempt 26.9 percent of their land area. Yet, that 26.9 percent receives municipal services. Isn’t that special?

 

Back to the transportation company who cuts their own tires, how do they continue to exist if the bulk of their revenue is from transporting?

 

I don’t blame the corporations for seeking all financial advantages available to them, it is their job. I do expect government to be more discerning in approving PILOTs, instead of winning their popularity contest.

 

There should be better criteria for approval, not the windfall method of whoever applies.

 

Fact is, municipal services without revenue growth will fail.

 

Hats off to the brains at ATM watch group compiling analytical data that proves what so many have suspected regarding our shrinking property tax base. The ATM page has a map and reports that presents the cold-hard facts at ATMChatt.

 

April Eidson 

 

* * * 

 

I'm just an old worn out almost retired business owner in Chattanooga, so I'm not a fan of pilot tax base reductions myself. However, April Eidson, I'm afraid you have misinterpreted the map on the ATMChatt website.  When you state that the ATM study concluded that 26.9 percent of the land mass in the city of Chattanooga has PILOT property tax exemptions, I was skeptical, to say the least.  The actual land are covered by pilot exemptions is 2,097 acres, or 2.29 percent of Chattanooga's land area.  Exempt area is 20,122 acres, or 21.99 percent, which has nothing to do with pilots.

 

Most of that exempt land has been that way for many years.  This includes churches, Riverpark, TVA properties, state, federal and city parks.  I think you would agree that those exemptions are for the greater good of our citizens.

Your point will be taken more seriously if you use solid information.

Harry Presley
Chattanooga 

 

* * * 

 

I feel April Eidson did not realize the maps included churches, etc. However, $15,000,000 is a loss that even Mr. Presley did not dispute. Regardless of the map, the bank account will reflect the loss from PILOTS and TIFS.

 

Helen Sharp has forgotten more than most will ever know about tax freebies, read up on her work or speak with her, many can learn just what these tax freebies mean to those pushing the wagon, not riding in it.

Joey Blevins



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