By Daniel Connolly, Memphis Commercial Appeal
April 23, 2011

Two Republican Tennessee lawmakers are backing legislation that would give the Shelby County government an advantage in a $6 million-per-year tax dispute with the city of Memphis.

The bill’s sponsors are Sen. Mark Norris and Rep. Curry Todd, both from Collierville. Norris says he introduced the bill this week on a request from the county administration and that county Mayor Mark Luttrell spoke to the Shelby County legislative delegation about it during a visit to Nashville Wednesday.

So far, the bill has only passed a preliminary vote in the state House.

The legislators’ move comes as both the city and county governments are struggling with tight budgets for the 2011-2012 fiscal year, and the outcome of the tax dispute might influence decisions on cost-cutting measures.

Luttrell has asked the County Commission to trim about $23 million from this year’s general fund budget. Job cuts and other austerity measures are possible.

Memphis Mayor A C Wharton has proposed a budget to the City Council that includes 125 layoffs and would reduce the number of paid holidays most city employees get from 14 days to two.

The tax dispute has to do with the distribution of payments from Memphis Light, Gas and Water Division.

MLGW doesn’t pay property taxes on its buildings and equipment in the Memphis area, but it does make “payments in lieu of taxes.”

Currently, MLGW makes its payments to the city of Memphis, and the county says it isn’t getting a fair share of the money related to the utility’s gas equipment.

Norris says under his bill, the utility would make payments directly to the county, rather than working through the city.

The disputed amount is about $6 million each year, and the conflict dates to about 2000, county Chief Administrative Officer Harvey Kennedy has said.

If the bill passes, more money would flow to the county in the future. However, the city and county will continue to debate the county’s claim that the city owes money for past years, Norris said.

County Commissioner Mike Ritz recently called for the county to file a lawsuit to extract the money from the city. In a public meeting, Luttrell told Ritz that he wanted to continue talks with Wharton and to try mediation before going to court.

Ritz said Luttrell phoned him Friday to update him on the matter, and said officials from both the county and city administrations were scheduled to talk again Monday.

Efforts to reach Luttrell and Wharton were unsuccessful Friday, a holiday for city and county governments.

 

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