Shelby Co. Commission considering 30-cent property tax increase. Five things to know

Shelby County Commissioner Erika Sugarmon Wednesday morning introduced an alternative to a potential wheel tax increase, sparking official debate on her proposed property tax hike.

The proposal would increase property taxes by 30 cents, placing it at $3.69 per $100 of assessed value. Shelby County Mayor Lee Harris discussed the proposal in a meeting Sunday with four commissioners, but it wasn't formally introduced to the full commission until Monday.

Here's what to know about the proposed property tax and wheel tax increases.

What's the difference between the proposals?

The property tax increase would add $69 million in additional revenue to the county in its first year, compared to the wheel tax's $34 million in the first year, and is proposed to last for two years and then revert. For example, homeowners with property valued at $100,000, will pay an additional $75 in taxes each year under Sugarmon's proposal. For those valued at $1 million, the tax hike will be a $750 increase, according to documents.

The wheel tax assesses everyone in Shelby County a flat-rate $100 fee per residential vehicle and is a $50 increase over the current rate.

What do supporters of the property tax proposal say?

Sugarmon, in the proposal, called the property tax "progressive," and said the proposal is intended to "more equitably" distribute the tax burden.

"This is just a proposal," she said Wednesday. "I don't know if there are any other proposals coming, but this gives options to commissioners because there needs to be some type of funding. My constituents have reached out to me, as well as business owners, who have more than one vehicle, and say that [the wheel tax] isn't right. They'll go to Arkansas to get their tags renewed. [The wheel tax] is not going to have the impact that we think."

Sugarmon said the two-year span for the increase would save some residents money compared to the wheel tax.

"[The wheel tax] is regressive, it's not fair to the working class and poor people," she said. "But you see just a $50 increase in the wheel tax compared to a, maybe, $75 increase in property taxes. But guess what, after those two years the property tax hike goes away. The wheel tax does not. So, in a couple of years, you'll be past the amount of the property tax increase."

What do opponents of the property tax proposal say?

The property tax increase was described by Harris as potentially damaging to incoming businesses, and the county mayor on Sunday described the situation as one where either a wheel tax increase or a property tax increase is inevitable. Outside of the Shelby County Commission's budget and finance committee Wednesday, Commissioner Mick Wright, who also was at the Sunday meeting, said the property tax increase would be a "disaster" for Shelby County.

"What [Sugarmon] is proposing is substantially more than what the wheel tax would generate," Wright said. "The only areas of agreement...were that we do have a structural imbalance. Sooner or later, we are going to require the county to reassess. I think what we need to be doing is shoring up the amount that we spend and rooting out wasteful spending. A massive, 30-cent property tax rate [increase] is just outrageous."

A property tax increase would be particularly unpalatable to constituents like Wright’s who live outside the city limits and generally have higher home values. Wright also said the property tax increase could harm future businesses that could decide not to come to Shelby County if the proposal is accepted.

"I've been getting calls all last week from people who are responsible for recruiting business to Memphis and Shelby County," he said. "They talk about our current [property tax] rate being a hindrance and a barrier, because businesses that have an opportunity to expand, and to look around different communities, they consider those top-line rates and the affordability of moving their business to Memphis versus locating in Arkansas or Mississippi."

What about budget cuts?

When asked if he would support a property tax increase lower than the proposed 30-cent increase, Wright said he believes that new revenues will be needed even if spending cuts happen.

"It looks like there do need to be, at some point, a mix of cuts and new revenues," he said. "That's why we made the agreement we came to Sunday. If we can follow through on that, I think that would be the best outcome for taxpayers."

Sunday, the group gathered agreed to about $9 million in cuts to the budget, all from the $17 million in items commissioners had added to Harris’ budget. The four commissioners present Sunday now have to float those cuts to their colleagues and see whether they can be officially approved.

Related news: After previous failure, Shelby County Assessor again seeks two-year reappraisal cycle

What other concerns do commissioners have?

Sugarmon's proposal comes at a time when the Memphis City Council is also considering a 29-cent property tax increase for those living within Memphis city limits. The two tax increases, should they be adopted, would spell significantly higher property taxes for those living within Memphis city limits.

Commissioners Wednesday also expressed concern on the potential impact raising the property tax could have on renters, with Commissioner Charlie Caswell pointing to a potential rent spike if the tax were to pass.

If the property tax were to be increased by the county commission, it would be the first increase in a decade.

Katherine Burgess contributed to this report.

Lucas Finton is a criminal justice reporter with The Commercial Appeal. He can be reached at Lucas.Finton@commercialappeal.com and followed on Twitter @LucasFinton.

This article originally appeared on Memphis Commercial Appeal: Shelby Co. Commission considering 30-cent property tax increase