Editorial 12/18: Realtors gird for battle

The Commercial Appeal
December 18, 2005

A lobbyist for Tennessee Realtors gave local governments a helpful heads up last week: If their campaign for more local taxing authority is aimed at the real estate industry, they've got a high-tech fight on their hands.

"If we don't sit down and work out an agreement, we're going to fight you worse than before," Nashville attorney Russ Farrar told lobbyists for county governments. "We've got instant e-mail access to 30,000 Realtors across the state. We'll be pulling out everything we've got to beat you."

In a subsequent telephone conversation, Farrar said Realtors are open to some sort of agreement on new sources of revenue for local government, perhaps more increases in sales and wheel taxes.

"We have a real problem with everything going back to nothing but real estate transfer taxes, impact fees and adequate facilities taxes," he said. "We would be glad to sit down with anybody that's part of this and see if we could work out something that was a broad-based, fair tax instead of depending on real estate developers, property owners and builders."

Going to the max with Tennessee's highest-in-the-nation combined state and local sales tax rate and forcing people to pay more wheel taxes might work somewhere, but they seem like poor solutions to Shelby County's money problems.

Raising general property taxes across the board has been the preferred method of keeping up with county expenditures. That's obviously unfair to those who don't contribute to the financial pickle the county finds itself in. That's where suburban development comes into the picture.

While home building has created a lot of jobs and paid some bills, the demand for new publicly funded infrastructure -- especially schools in the sprawling suburbs -- has sent the county debt burden soaring to $1.7 billion.

A lot of counties across Tennessee are dealing with the issue, and after years of inaction some momentum is finally building for the proposal, being pushed by Shelby County Mayor A C Wharton and others, to obtain local taxing authority on real estate transfers and the like.

Last week the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) recommended that cities and counties be given greater leeway to enact new growth and development taxes without legislative approval.

So the battle lines are set, and prospects are dim for compromise, such as the idea offered by Sen. Mark Norris (R-Collierville), a member of the TACIR board.

Norris suggested enabling local governments to enact certain taxes but only in lieu of raising property taxes. He would take the decision out of the county commission's hands by requiring public referendums.

Norris voted against the TACIR recommendation, which would leave the decision in local government's hands. He predicts little chance of passage in the General Assembly, which may be a safe bet, too.

Under the circumstances, though, opponents of taxes tied to new development should be willing to go beyond saying "no" and offer a realistic solution to the county's financial quandary. If there's a better or fairer way to begin chipping away at the debt, let's hear it.