Shelby County effort to fix tax rate fails at first pass

Shelby County commissioners failed to pass an ordinance fixing the tax rate as tensions continue over the possibility of losing $2 million or raising taxes. 

During a Shelby County committee meeting, commissioners grilled Trustee Regina Morrison Newman, Chief Administrator Dwan Gilliom and Budget Director Michael Thompson while discussing the county’s inability to have a tax rate of $3.399, on which Shelby County Mayor Lee Harris based his budget for the 2023 fiscal year.

Although the tax rate is based on guidance from the state, Shelby County’s “dinosaur of a system”  is unable to use a tax rate with more than two digits after the decimal point, according to Newman.

“Shelby County has its own computer system. Most of the other counties–the smaller counties– are on the state’s computer system. They have the newer computer system, Davidson County has the newer computer system. We have a 25-year-old computer system,” she said. 

The county is currently making updates but the process will take years and cost $5 million to complete, according to Newman, and will be ready in 2024. 

Commissioners now face the decision to remove a digit from the proposed tax rate–from 3.399 to 3.39– or raising taxes to $3.40. If commissioners choose to remove a digit, the county is set to lose $2 million. 

Technically, said Newman, the county can use the $3.399 tax rate, but this would require hiring a staff to manually calculate 403,000 tax bills.

“So we get to be the bad guys, essentially. Either we cut the budget or raise taxes,” said Commissioner Amber Mills. 

Although Harris has proposed a county budget based on $3.399, Thompson said their office added contingency plans based on the commissioner’s decisions.

Mills asked why the Mayor’s Office based the budget on three digits. 

“That makes absolutely no sense,” said Mills, and accused Thompson of partisanship. 

Gilliom reiterated that the tax rate was based on guidance from the state and called the accusations unfair.

“I think it’s unfair to suggest this evening that this is a partisan issue, by no means is this a partisan issue. We did what the state wanted us to do,” he said. 

“At the end of the day, this is a decision that this body needs to make,” he added. 

The ordinance failed on first reading.