Hamilton County soon will start charging the city of Chattanooga a fee for collecting the city's sales taxes, County Trustee Bill Hullander said Monday.
Hullander said that under the old sales tax agreement, which expires May 23, the county collected sales taxes for free. But he now intends to implement a 1 percent to 2 percent fee. A 2 percent fee would bring in $1 million a year, Hullander said.
That's nowhere near the $10.5 million the county says it will lose when the agreement expires. The agreement has been used for decades to jointly fund agencies with the city such as the Chattanooga-Hamilton County Health Department.
But Hullander said by law he's going to have to charge the city something.
"If the agreement goes away, I have to do it," he said.
Richard Beeland, spokesman for Chattanooga Mayor Ron Littlefield, said the city anticipated the county might start charging to collect sales tax.
"Our department of finance has already budgeted that into our ongoing budget talks, so as we move forward that's already factored in," Beeland said.
Littlefield released a statement saying the county now has more money to fund agencies it said it would have trouble paying for when the agreement expires, such as the health department.
"Surely, operations like the health department that stand to offer a net savings of public resources should now be off the chopping block," Littlefield said in a statement.
County Mayor Jim Coppinger did not respond directly to Littlefield's comments, saying the county's auditors learned the county could charge a fee a few weeks ago.
"We're doing what responsible leadership does in looking at the budget in its entirety," Coppinger said. "We're looking anywhere we can to save taxpayers' dollars."
Commission Chairman Larry Henry said the county will pay for what it's constitutionally obligated to pay for, and he said he expects the city to take care of its responsibilities with the money it will receive when the sales tax agreement ends. He said the County Commission will be hearing agency requests today that are beyond what it is constitutionally required to fund.
"That's their responsibility now," Henry said.
Contact staff writer Dan Whisenhunt at dwhisen email@example.com or 423-757-6481. Follow him on Twitter at http://twitter.com/DWhisenhunt.