Shelby Co.: $25 wheel tax hike, flat property tax form budget supporting Regional One, new schools

Next year, Shelby County residents can expect the property tax rate to stay flat, but they are likely to have a $25 increase to the vehicle registration fee, commonly called the wheel tax.

While the wheel tax garnered a needed ninth vote in a lengthy Shelby County Commission meeting that lasted from Monday afternoon into early Tuesday morning, it still needs a second vote of nine of the commission's 13 members at another meeting, now scheduled for Wednesday at 9:45 a.m.

In the more than 10-hour meeting, commissioners passed an operating budget of $1.6 billion and a capital budget of $188 million for the next fiscal year.

The at-times contentious meeting included heated debate on the merits of a property tax increase versus a wheel tax increase as well as why certain items proposed by some commissioners were cut from the budget but not others.

Here are the highlights of the Shelby County budget for fiscal year 2024, which starts July 1.

Wheel tax

Commissioners took the first of two required votes to increase the wheel tax by $25, an amount expected to bring in about $17 million in funding.

That's less than Shelby County Mayor Lee Harris' initial proposal of a $50 increase, which would have brought in about $33 million in revenue, money needed for new infrastructure and to patch a hole in the budget caused by the application of a sales ratio. However, that $50 increase failed a first reading of the commission, initially by two votes and then, on a second attempt, by one vote. Since then, Harris has worked with commissioners, particularly Republican Commissioner Mick Wright, to secure the needed ninth vote.

Early Tuesday morning, Wright became the needed ninth vote, saying he had heard from many business leaders concerned about a property tax increase that had been proposed as an alternative to the wheel tax hike.

"This is not an easy vote for me, but I think if we can avoid a property tax increase and make a serious investment in both our school system and Regional One, that's a vote I'm willing to take," said Wright.

The wheel tax vote ended up being approved on a 9-4 vote, with commissioners Amber Mills, Edmund Ford Jr., Erika Sugarmon and Britney Thornton voting "no."

Harris on Twitter early Tuesday morning said he was "pleased that the County Commission approved first steps in funding the rebuild of Regional One, our community's only public hospital, along with the new Frayser High School. They did all of it without a property tax increase and while cutting unnecessary spending."

Property tax

Shelby County commissioners ultimately passed a property tax of $3.39 per $100 of assessed value, the same rate as the current year. Harris had proposed a one-cent decrease, which would have cost the county $2.3 million in revenue, but commissioners decided against the cut.

Sugarmon advocated strongly for a 30-cent increase to the property tax instead of a wheel tax increase, calling the wheel tax regressive since it is a flat fee regardless of a person's income level.

Funding for Regional One, two new schools

The capital budget proposed by Harris and passed by commissioners includes significant investments in county buildings, raising the county’s capital improvements project budget to $150 million from its previous cap of $75 million. That $75 million cap had been in place for several years in order to help the county bring down its debt.

The new budget includes an initial $9.9 million allotment to begin working on a new high school in Frayser as well as $36 million for a new high school in the Cordova area.

A new Regional One Health campus will also be supported with $350 million from the county over five years, a contribution that the county hopes will open doors to matching funds from the state and elsewhere.

Funding from the wheel tax increase will go entirely to cover the debt service for infrastructure projects, including Regional One and the two new schools.

The passage of a $25 increase rather than the originally proposed $50 means there will not be as much funding for other capital projects across commission districts.

Violence interruption fund

Harris proposed a $1.1 million commitment to a new violence interruption fund that he has said will work with multiple Shelby County organizations to stop violence before it happens.

Tax relief

Commissioners added $2.4 million to the Shelby County Trustee’s tax relief fund. The goal of this program is to alleviate the property tax burden on low-income residents who are seniors or disabled.

The income level for residents who can receive a rebate for the wheel tax was also increased to a threshold of $25,000 for seniors and residents with disabilities.

"It's important that we spread awareness about this underutilized resource, particularly as we just increased the threshold to the $31,000 so more people would qualify, but we know it's underutilized," Thornton said.

School funding

Commissioners also approved the Memphis-Shelby County Schools' operating budget of $2.7 billion and approved a capital budget for all school districts in the county of $60 million. Out of the $60 million, about $46 million will go to MSCS for infrastructure needs.

That is less than the $66 million in capital dollars requested by MSCS but significantly more than the $21 million allocated to the district last year.

School district news: Mid-meeting resignation, $2B budget headline turbulent MSCS board meeting

Cuts to commissioner-led initiatives

Prior to the meeting, commissioners had allocated millions to a range of programs and grants. During the meeting, commissioners Michael Whaley and Wright proposed to cut 10 of those, removing $5.5 million in expenditures.

That drew strong pushback from Thornton, who pointed out that the 10 expenditures had been proposed by three commissioners who had opposed the wheel tax.

"I do not think this is a coincidence. I think this is an attack," she said.

Ultimately, a motion by Thornton to add back several of those items failed.

Katherine Burgess covers government and religion. She can be reached at [email protected] or followed on Twitter @kathsburgess.

This article originally appeared on Memphis Commercial Appeal: Shelby County Commission passes $1.6 billion operating budget