City says collection fee can fund joint agencies

City says collection fee can fund joint agencies

May 19th, 2011 by Cliff Hightower in News

BY THE NUMBERS

$36.7 million: Projected Chattanooga sales tax collections for fiscal 2011-12

$735,000: Trustee's fee at 2 percent

$367,500: Trustee's fee at 1 percent

Source: Chattanooga finance office

Any fee that Hamilton County charges Chattanooga for collecting city sales tax should be used to support agencies once jointly funded by the city and county, a city spokesman said Wednesday.

"Those were the funds we were planning to use to fund agencies," said Richard Beeland, spokesman for Mayor Ron Littlefield.

County Commission Chairman Larry Henry said the city should mind its own business.

"I kind of take offense at the city trying to dictate our budget," Henry said.

County Trustee Bill Hullander has said his office will start charging Chattanooga a 1 percent to 2 percent fee to collect city sales tax. Money from the fee will go to the county general fund.

By law, the trustee collects sales taxes for all 10 county municipalities. Under a 45-year-old city-county sales tax agreement, the county didn't charge a fee to participating cities.

The end of the agreement means Chattanooga will regain control of money that used to be turned over to the county to support agencies such as the library, health department and planning agency.

But the agreement expires Monday and Hullander said the state constitution requires him to collect a fee to handle tax collections.

At a budget meeting Tuesday, city Chief Financial Officer Daisy Madison said Chattanooga would take back about $9.7 million it formerly gave the county under the sales tax agreement.

She said a 2 percent trustee's fee on estimated sales tax collections of $36.7 million would amount to $735,000.

Beeland said that is "an outrageous amount of money for an electronic transfer."

Hullander said he has asked for an attorney general's opinion on the amount of the fee, but after talking with other trustees in Tennessee, he expects it will be 1 percent.

He said he does not foresee having to charge the city retroactively for the last 45 years of the agreement.

"I wouldn't push for anything like that," he said.

Henry said the county is just beginning its budget process and it's premature for city officials to tell the county to spend the new fee on the formerly jointly funded agencies.

"They can ask," he said. "That doesn't necessarily mean it's going to happen."

County Mayor Jim Coppinger said he's growing tired of the back-and-forth chatter over the sales-tax agreement.

"I don't know why they keep talking about how we're going to fund the agencies," Coppinger said. "That's our business."