Huntsville Board Approves Tax Hike

September 1, 2005

HUNTSVILLE - By a 4-0 vote with Alderman Wes Riggins abstaining, the Board of Mayor and Aldermen approved an increase in the town’s property tax rate from 19 cents per $100 of assessed value to 65 cents per $100 of assessed value.

The vote followed more than an hour of discussion between the board and members of the public at a lengthy, standing-room-only public hearing Monday evening.

The public hearing preceded the second and final reading of the town’s tax levy ordinance for Fiscal Year 2005-2006, which had originally called for increasing the tax rate to 75 cents. But following Monday’s discussion, during which an overwhelming majority of the public in attendance supported an increased tax rate but opposed the 300 percent jump reflected by an increase from 19 cents to 75 cents, the board recessed and held discussions behind closed doors, after which they returned and ultimately lowered the proposed increase to 65 cents.

Prior to the start of discussion at Monday’s public hearing, VeRhonda Wilson presented the board with 122 signatures from Huntsville residents and business owners that had been obtained via petition since the board’s special meeting last month, at which they passed the first reading of the tax levy ordinance.

Ella Smith, owner of Fireside Restaurant in Huntsville, also voiced her objection to the large increase.

“I don’t have a problem with a tax increase,” she said. “(But this) is too big an increase. If I increased my food at the rate you’re increasing taxes, I wouldn’t have any business.”

Smith said that the increased tax rate will cost he business approximately $2,000 to the town over the next two years.

“You’re taxing me to do business in your town, and you’re taxing me dearly,” she said. “So have a heart.”

Smith called for increased taxes that are reflected through small increments.

“I don’t believe there’s anyone in this room that has a problem with a tax increase,” she said. “I wanted to be a part of this town. I fought for Huntsville to be a town, and I’ve done everything I can do to support it. (But) I just have a problem, and I think everyone in this room has a problem, with an increase of this amount. Let’s just do it a little bit at a time. Let’s use some common sense.”

Joe Marlow, owner of Joe’s Tire, said the proposed tax increase would be devastating for his business.

“You’re taxing businesses out of business,” he said. “We cannot survive a 400 percent increase. I’ll have to shut down. There’s no way I can do it.”

Several of the town’s residents also spoke up in opposition to the size of the proposed increase.

“I can see a need for a reasonable increase - 50 percent, maybe, which would be ridiculous if the county came up and said they’re going to increase the tax rate 50 percent,” resident Jake Sharp said. “But 400 percent . . . I can’t see how you can go from one year to the next and suddenly need a 400 percent increase.”

Mayor George Potter argued that increases in various items such as gasoline and electricity are effecting the town just as much as the common citizen.

“All taxes are going up,” he said. “Gasoline and everything is hitting the town just like it is hitting all of you.”

Potter said that even with the increase, the town’s tax rate is relatively cheap.

“With this tax increase, 75 percent of the town would still pay less than $100 per year in taxes,” he said. “We’re paying less than every town around us, even with the increase. Right now, most of us are paying $30 or $40 in taxes. You can’t run a town on nothing.” Potter added that the board was in no way attempting to take advantage of the town’s residents.

“Somebody is out there spreading the news that the board is going to get a salary and the mayor is going to get a salary . . . nothing could be further from the truth,” he said. "We don’t want this money. But the way we are now, we can’t even blacktop roads. And if we don’t start doing two or three roads per year, we’re going to be back on gravel.”

Potter reminded the audience at the public hearing that the board members face the same tax increases.

“Everybody at this table here is getting their taxes increased, too,” he said. “There is nobody here taking advantage of this town. We’ve absolutely cut and cut and cut until we can’t cut any more. There’s nobody gouging anybody, I promise you that. And I promise you that it’s not very comfortable sitting here and raising people’s taxes. We don’t want to do it, but I don’t think you want your town to run down.”

Riggins, the only board member to vote against the increase on its first reading, suggested that the increase might deter future growth.

“It seems to me that we’re cutting our own throat for a short-term benefit,” he said. Vice Mayor Mark Love sympathized with those saying the tax increase was too large a burden to bear, but said that it was necessary.

“I’ve been a business owner myself and the tax burden is pretty heavy,” he said. “Tax increases are unpopular, especially politically. But we’re in a dilemma in that costs continue to increase and services are costing us more on a one-to-one basis. That’s reflected in our budget.”

Love called the tax increase a “supply and demand” issue.

“Everyone is demanding services and our revenue supply is minimal,” he said.

Currently, he said, the town brings in $32,000 per year in property taxes. The increase would bring that total to $118,000 per year. He added that the tax increase will be felt the most at the top.

“The majority of the people that will actually bear this burden will be the top 25 percent of the community,” he said.

Love added that the increase is necessary for the town to obtain its current level of services. Both he and Potter pointed out the town’s ever-improving fire department, which currently boasts an ISO rating of 6.0 percent, a rating that can save homeowners money each month on their fire insurance policy, depending upon their insurance agency.

Love added that, currently, only 21 of the town’s 56 businesses are in compliance with the town’s business tax, totalling approximately $9,000 per year. If more businesses were in compliance, he said, such a large tax increase wouldn’t be necessary.

Don Stansberry, III, owner of Grand Vista Hotel, said those numbers reflect unfairly on the town’s business owners who are in compliance.

“Like most of us, I can understand the need for an increase of revenue,” he said, “but to increase the rate for those who are complying so that those who don’t want to don’t have to doesn’t seem to be fair or American or anything else, and I don’t believe that’s something you’d want to stand for.”

Stansberry, who said that the tax increase would cost his business approximately $4,000 per year to the town, said that he had seen the town’s budget and that it “didn’t seem to be over-inflated,” He added that a substantial tax increase is needed. But, he said, “don’t double-whammy us.”

He pointed out that the Fiscal Year 2005-06 budget, which includes the tax increase, would create a surplus of around $36,000 in varous funds, including $34,000 in the town’s general fund. He suggested that the board consider dropping the business tax or reducing the proposed property tax increase.

Alderman Robert Smith said that the surplus in the general fund was needed to match grants that the town might be eligible for. If those funds are not available, the town can become ineligible for those grants.

Following the discussion, the board recessed for approximately 10 minutes before returning with the proposal to allow the audience members to vote by a show of hands whether they would prefer a tax levy that would increase the property tax to 65 cents (rather than the originally-proposed 75 cents), or one that would leave the increase at 75 cents and drop the business tax.

Riggins, who said that he did not take part in the recess discussion because he was meeting with members of the public, said that there were “a lot of things that we need to check with our lawyers and MTAS.” He made a motion to table the tax issue until a later date, a motion that was not acted upon further.

Smith motioned that the tax rate be increased to 65 cents.

Following a second by Love, the board voted 4-0 in favor of the motion.

In other business Monday, the board adopted the Fiscal Year 2005-06 budget on second reading, approved the amended Fiscal Year 2004-05 budget on second reading, and approved the second reading of an ordinance to adopt a digital zoning map of the town. The board also voted to authorize payment of $500 to the Tennessee Asphalt Company to repair damages to a resident’s private driveway that were caused when the town’s mowers were mowing the driveway’s right-of-way without the authorization of the homeowner.

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