New taxes??

Interesting article in the Wednesday supplement yesterday for those who missed it (http://media.timesfreepress.com/epaper/community/sm/02-09-2011/index.html).  The Town Council is finally acknowledging that revenues are a concern. This issue was raised in the recent election, but was downplayed. Susan Robertson stated at that time that she "hoped" taxes wouldn't have to be raised for 3-4 years. Now, 3 months later, she is quoted as saying they need something to "pull out of our hat" for new revenues and proposed a $10 wheel tax. In the recent election, just 3 months ago, the concern about the town's shrinking population was raised and ignored by the incumbents. Even though the US Census Bureau has consistently predicted that Signal Mountain's population has shrunk over the last 10 years, the council denied it based on their scientific opinion that, as Annette Allen is quoted "It's my experience that the intersections are busier". Susan Robertson is quoted as saying "I can't wrap my head around it". However, facts are difficult things and can't be ignored and it is the job of the Town Council to wrap their heads around them.

http://www.census.gov/popest/cities/tables/SUB-EST2009-04-47.xls shows the data:

Signal Mountain town population
2009: 7,253
2008: 7,179
2007: 7,180
2006: 7,255
2005: 7,264
2004: 7,282
2003: 7,338
2002: 7,390
2001: 7,408
2000: 7,440 (July 1 estimate)
2000: 7,429 (April 1 census number)


The annexation settlement won't go into effect until the end of 2012 with new revenues not appearing until late 2013. In spite of rhetoric to the contrary, the annexation is not a large net revenue increase for the town. One concern I have had is the massive extra payments we are making on the high school bond debt. We were originally indebted for approximately $7.7 million to Hamilton County by the referendum. After subtracting moneys previously set aside, the amount to be borrowed was approximately $7.236 million including costs of the loan. Since 2008, when the first payments were due, we have paid this down to approximately $3.9 million after applying the $317,000 which I recently discovered had been overlooked even though the Council voted to apply it to the loan in 2007.
 
What does this mean? In 2009 we payed an additional $900,000 on the school bond. In 2010, we paid an additional $375, 000 (not counting the $317,000 mentioned above). This amounts to an extra
$.06-$.11 of sales tax. While it is always good to pay down debt, very few of us would starve our children or even put off college to pay off our mortgages early. At present (at least last time I checked which was last fall) the interest rate on this debt was less than 1%! I have long advocated that, if the town needs more revenue (please note the word "if"),  we should adjust the repayment schedule on the school bond. The original plan was to pay it off over 20 years. At present projections, we could have it paid off as early as 10 years (approximately 2018). I would urge the council to consider this option before considering a "wheel tax" or increasing the overall property tax rate, especially when we are still a long ways from full recovery from the recent "Great Recession" and are apparently losing population. High taxes are not attractive to new residents. I am all for paying off debt as quickly as possible, but not at the expense of our town's infrastructure and services.
 
I should note that my figures may be inexact. They are based on conversations with our finance director last fall just before I went off the council. The interest rate varies on a continual basis. It should also be clear that, if the council shifts this money to general revenues (it would require lowering the $.29 "school tax" and raising the general tax), that tax increase would still be in place when the school tax is retired in a few years. However, it is unrealistic that we would go another long period of time without a property tax increase. Ms. Robertson herself stated during the election that, when the school tax goes away we "could have a moderate" property tax increase (defined as less than 19%). This way, the immediate impact on taxpayers would be no change in taxes for at least 8-10 years and then taxes would still go down when the bond is paid off.
 
I would invite comment on this issue.