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Hamilton County Mayor Jim Coppinger is hoping to have state law changed so that counties get a share of returned sales tax from the state.
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Collegedale Mayor Katie Lamb

Hamilton County Mayor Jim Coppinger is continuing his effort to get the unincorporated county a serving of the shared, state sales tax pie. But local city mayors are not welcoming him to the table.

Each year, the state returns a small portion of sales tax revenue — 4.6 percent of 6 percent of the 7 percent state sales tax — to municipalities based on population. The bigger the city, the larger the share.

That's in addition to the local sales tax cities and counties already collect.

And while that's a tiny percentage, Tennessee Department of Revenue reports show the state gave more than $270 million to cities statewide last fiscal year, with $17.7 million going to Hamilton County municipalities. But the counties' coffers didn't see a penny.

Estimated impact of sharing sales tax with the county

This chart shows how much shared sales tax each entity is expected to receive if the county is added to the list of recipients.

Municipality // Estimated 2016 revenue // Estimated loss due to changes
Chatanooga // $9.1 million // -$3.9 million
East Ridge // $1.1 million // -$485,456
Soddy-Daisy // $692,579 // -$297,830
Red Bank // $624,577 // -$268,588
Collegedale // $506,050 // -$217,617
Signal Mountain // $446,866 // -$192,166
Walden // $100,207 // -$43,092
Lookout Mountain // $99,785 // -$42,910
Lakesite // $99,098 // -$42,615
Ridgeside // $21,752 //-$9,354
Unincorporated County // $5.5 million // $5.5 million
Source: University of Tennessee Municipal Technical Assistance Service

 

Coppinger says that needs to change. He's asking lawmakers to include counties — or at least Hamilton County. And legislators seem to be listening, but they are coming up with their own ideas. Sen. Bo Watson discussed some early concepts with the Times Free Press in May.

The sales tax rules were written ages ago, Coppinger said, before cities annexed unincorporated land to bolster tax rolls. Now, Hamilton County's general fund only gets about $3 million in sales taxes from stores in the unincorporated counties — although county schools get half of all taxes collected.

He says it's only fair that the unincorporated county get a piece.

"It's the shared portion that comes back from the state. It's not [municipal] money that was collected in your municipality. You keep that. We are not taking any of that," Coppinger said. "We are just asking to be treated as the 11th piece for the 104,000 people living in the unincorporated county."

If the county was included, a University of Tennessee Municipal Technical Assistance Service report estimated the general fund would see a $5.6 million shot in the arm.

City mayors are not sympathetic, however.

"What I saw, it would short Soddy-Daisy about $300,000, and we are not in favor of that at all," said Soddy-Daisy Mayor Rick Nunley. "Whatever the impact, City of Soddy-Daisy can't afford to lose any money. We are scraping by as it is."

In fiscal year 2015, Soddy-Daisy received $950,284 in shared sales tax, according to state reports. The MTAS study, which Coppinger asked for and shared with city mayors in a meeting last month, estimated the Soddy-Daisy would lose $297,830 if Hamilton County joined the list.

Shared sales tax history

This shows the actual amount of shared sales tax revenue each municipality in Hamilton County received in the 2015 fiscal year

Chattanooga - $12.6 million
East Ridge - $1.6 million
Soddy-Daisy - $957,284
Red Bank - $877,247
Signal Mountain - $629,681
Collegedale - $623,582
Walden - $142,907
Lookout Mountain - $137,938
Lakesite - $137,486
Ridgeside - $29,365
Source: Tennessee Department of Revenue

 

 

Chattanooga would lose the most. The Scenic City recieved $12.6 million in shared sales tax last year, and the MTAS report estimates it would get $3.9 million less than expected in fiscal year 2016.

Chattanooga Mayor Andy Berke called Coppinger's plan "imprudent and shortsighted" and said in an emailed statement Friday the hit to city revenue could threaten public safety.

"We have a complicated tax system and to simply pick one portion to change is imprudent and shortsighted," Berke said. "Decreasing Chattanooga's sales tax portion could cause significant cuts to critical city services and departments, including public safety initiatives and our Chattanooga Police Department. "

John Roberts, mayor of Red Bank, said he liked and respected Coppinger, but he simply couldn't get on board.

The MTAS report estimates Red Bank would get about $268,588 less from the state if the county got a portion.

"It will be a huge hit for us. We are a small municipality, and we can't expand anymore. We try to collect as much sales tax as we can. This would be a huge hit for us," Roberts said.

Collegedale Mayor Katie Lamb, who also opposes the proposed sales tax changes, said Coppinger is just looking for ways to avoid a tax increase.

"But in the long run he's going to force the various municipalities to raise their portion of the tax. But when we do that, the county schools still get half of the tax that we raise. We are just behind the eight ball, no matter how we go," Lamb said.

To which Coppinger says, "You're dang right. Everyday we are looking for ways to avoid raising taxes. If county taxes go up, everybody's taxes go up."

Contact staff writer Louie Brogdon at lbrogdon@timesfreepress.com, @glbrogdoniv on Twitter or at 423-757-6481.

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