Celina has the legal right to stop property taxes under state law, but the move could pose additional challenges to funding a city’s programs, personnel, and general operations.
That according to Tennessee Comptroller’s Office Director of Communications John Dunn. The Celina Board of Aldermen discussed its desire to eliminate the town’s property tax in its new fiscal year budget. Dunn said several cities in Tennessee do not collect property taxes. He said leaders must take that loss of revenue into consideration when passing a new budget.
“The risk would mainly be making sure that they have enough money to operate their city effectively,” Dunn said. “To provide the services that their citizens count on and depend on, and do it in a way where they’re also able to pay their obligations, such as their payroll and any debt that they might have.”
Dunn said rural towns often rely more heavily on property tax because they do not typically generate as much sales tax revenue. He said even with fewer businesses and fewer shoppers providing that sales tax, leaders can still assess whether they have been over-collecting property tax or if the revenue it generates is a necessity.
“The biggest expense for any city or town is going to be its personnel, frankly,” Dunn said. “So, supporting payroll is an important part of revenue for a city or town. Of course, cities and towns provide lots of services as well. Many have parks departments, many have road departments, many operate police forces or fire departments.”
Celina voted to increase pay for city employees in its new budget.
Dunn said going forward, a future board of aldermen or a future mayor may face political challenges were they to attempt to reinstate property tax. He said imposing a tax after it has been removed may be a tough proposition to sell to voters, but the practical act of levying tax would not pose additional difficulty under state law.
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