The Dark Side: Annexation bill would deprive city of revenue

The Dark Side: Annexation bill would deprive city of revenue

February 27th, 2013 in Opinion Times

Republican and freshman state lawmaker Mike Carter, of Ooltewah, found a way to make headlines last week with his all-you-can-eat anti-annexation bill.

Rep. Carter says he brought the bill because of Chattanooga officials' previous efforts to amend its state-required growth plan in order to - in Carter's words - "cherry pick" affluent suburbs.

He calls the bill "Ryan's buffet rule" after the all-you-can-eat restaurant chain, and says it would require cities to "clean" their "plates" by annexing everything in their current urban growth plans before seeking to amend them.

What it really amounts to is giving counties all the buffet deserts: The good roads into town for the jobs here, the amenities of good shopping malls, theaters, parks and the riverwalks; and the police protection along the way. The trouble is that cities - and their taxpayers - are paying most of the bill.

Let's use a hypothetical citizen - we'll call him Joe Signal - who lives in an unincorporated portion of Hamilton County on Signal Mountain but works in the city.

At least five days a week, Joe drives to and from Chattanooga to earn a paycheck, and on weekends he heads to Hamilton Place mall for dinner and a movie, or to Coolidge Park to take his kids to the carousel.

Along the way, he drives on city roads, over city bridges, sits on city benches, and shops in stores and restaurants that were developed with city-paid perks and infrastructure. And while he's shopping or working, he's protected by Chattanooga police. His drive in town is orderly thanks to the traffic lights and signs - paid for by the city.

But Joe Signal's bill each year for property tax on his $250,000 home suburban home is $1,728, and it all goes to Hamilton County. True, he pays 4.5 cents on every dollar in sales tax when he eats and shops in the city [half of that is the county's sales tax], but that should average only about $140 a year for the city, based on estimates from the Tax Foundation, a Washington-based, nonpartisan tax research organization.

Meanwhile another hypothetical citizen, we'll call him Joe Hixson, has a similar life, but he lives within the Chattanooga city limits and pays both the county's $2.76 per $100 assessed tax rate and the city's nearly $2.31 rate - for a combined tax rate of just over $5.07.

Joe Hixson pays $3,171 in property taxes on his $250,000 home - nearly double that of Joe Signal. And, of course, he pays sales tax, too.

No one likes to pay taxes, and at first blush Carter's bill might sound appealing to many who bridle at the thought of paying more or being annexed. But, unpopular as they are, taxes are the only - underscore "only" - source of revenue goverments of any stripe have. Even permit fees that in reality are use taxes.

If a city like Chattanooga can't continue to annex urban growth areas that grow up on its borders because residents there rely on city roads, infrastructure, services and jobs, then that city can't thrive - let alone sustain the demands of maintenance and every-growing populations.

Carter's bill, while probably well-intentioned, has a dark side.

Basically it would prohibit annexations of communities outside of its 15-year-old growth plan if Chattanooga already had decided against annexing another area on the plan where there now is no community and no reason to extend services. Yes, the city could go through a time-consuming process to remove the no-growth area by rewriting the plan, but only with agreements from all the other governments locally. Getting those agreements took years the first time around.

Carter's bill also would block cities from annexing property held by owners who wish to come into the city - a retiring farmer, for instance, who wants to increase the value of his land by obtaining services like water and sewers to entice developers.

While we're all clamoring for better services and public money savings, we should be careful what we wish for.

Chattanooga is the machine that feeds us, employs us, entertains us, protects us. It's time we understand that we use its services and reap its benefits even if we don't live in it and pay taxes in it.