Rutherford County's Wheel Tax

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We have the capacity to raise funds 'for the kids', but is seems to be going 'elsewhere'?

Update - November 14, 2010: Currently the wheel tax rate is $52.50. The distribution is $2.50 to the County Clerk. $15 (30 percent) goes to the General Fund. $15 (30 percent) goes to the Highway Fund. $20 (40 percent) goes to Education - split between Rutherford County and Murfreesboro City schools based on daily average attendance with a weighted full time equivalent.

A common belief among Rutherford County residents is that when the sales tax was raised a half cent by public referendum and the then $10 wheel tax was passed to build Riverdale and Oakland high schools the wording of the referendum and wheel tax was that they would be repealed when the bond to finance the schools was retired.

Their memory is about half right. On September 10 of 1970, after massive campaigning a referendum to raise the local sales tax by a 1/2 cent passed 3,918 to 1,461. Two County Magistrates (as county commissioners were known then), Bob Baskin and Thomas Steagell, campaigned against the proposed increase.

On September 14 of 1970 bonds totaling $9,600,000 were approved 29-11 by the county court (the predecessor to today's County Commission). The court announced the just passed sales tax increase would raise about $400,000 annually, covering a little less than half of the cost of the annual bond payment. The next night School Superintendent Roy Waldron chose a contractor and Hardaway Construction was the successful bidder. The breakdown in costs were itemized as Architect Fees of $218,000, Land cost of $145,121, Utilities of $540,114, Construction costs of $7,057,000 and Stadiums at a cost of $234,000.

December 14, 1970 was a busy night for the county court. It bid $1,450,000 on two housing complexes at the Old Sewart Air Force base from the U.S. Government and passed a $10 wheel tax to cover the remaining costs of Riverdale and Oakland school's construction costs. The vote for the wheel tax was 36-2 with 2 passing. The two no votes were by Vesper Waldron and Clyde Elrod. During discussions prior to the referendum raising the sales tax and during discussions of the wheel tax it was stated that if they both were not passed then the county's property tax would have to be raised $1.00 per $100 to finance the schools.

To put the $10 wheel tax and the then cost of $234,000 to build two high school stadiums in perspective in 1970, a turkey was 29 cents a pound. A 3BR Home rented for $140 a month and a new 3BR Home in the Mitchell Nielson area was for sell for $19,800. Oranges were 3 dozen for a dollar - in December. Penneys sold men's dress shoes for $6.99 a pair and suits for $35.00.

No wording of the referendum or the wheel tax called for its removal when the bond to finance Riverdale and Oakland was retired. But the inference in 1970 led a lot of people to that conclusion, to the point that a lot of folks still believe it to this day. My question is now that the 1970 high school bond has been retired, what is the money that at one time was ear-marked for that purpose being used for? The two 1/2 cent sales tax increases and the now $70 wheel tax? Perhaps the recent tripling of OUR Rutherford County Commissioner's pay and the subsequent tripling of other county board member's pay required some of that money?

Government has a neat way of asking for taxpayer's support for a tax by saying it is for education and then 'moving' those funds later to other uses. The taxpayer stays under the assumption that the tax's original use is what is still being used for. Our County Wheel Tax is a perfect example of that government 'shell game'. Remember, when it was passed at the $10 amount in 1970 it was for schools, specifically to help retire the bond for Riverdale and Oakland High School. Here is a history of the wheel tax and it's various uses over the years:

A History of Rutherford County's Wheel Tax

December 14, 1970 Bk. 14, p. 75 - Private act ratified imposing $10 Wheel Tax to retire 1970 debt issued to build one or more high schools (Riverdale and Oakland).

June 9, 1975 Bk. 18, pp. 331-332 - Private act ratified increasing wheel tax to $15, with increase to apply toward retiring principal and interest on bonds authorized in 1975.

December 10, 1979 Bk. 20, pp. 530-531 - Private act ratified to provide that 2/3 of the wheel tax be deposited to the Highway fund and 1/3 to Debt Service to retire bonds issued in 1975. Remained $15. - here we start to see the 'education' use starting to be diverted to other uses.

April 4, 1980 Bk. 21, pp. 13-15 - Private act ratified increasing wheel tax to $25. $10 for 1970 High school bonds, $5 for 1975 bonds, $10 to Highway Dept. - see a pattern developing?

July 13, 1981 Bk. 21, pp. 347-351 - Private act ratified removing the portion of wheel tax applied to retire 1970 high school debt. Reduced rate to $15. - High School Bond issue still has years to go - see a pattern now?

December 9, 1985 Bk. 22, p. 577 - Approved on 2nd and final reading resolution increasing wheel tax by $15, bringing total to $30. No discussion as to allocation of revenue. After a brief period of uncertainty, the revenue has been distributed 2/3 to General Debt Service, 1/3 to Highway.

This would indicate the entire $15 increase went to General Debt Service and was added to the $5 that was originally added for 1975 bond issues. The next table demonstrates how this revenue has compared to education debt service expenditures since July 1, 1990. - The pattern is now complete

Wheel Tax Increased Again

Here is funds from Wheel tax from July 1 of 1990 through the end of June, 1998. Keep in mind that since December 9, 1985 zero (yes, zero) funds from the wheel tax has gone Solely to education. $17,061,033 was raised between 1990 and 1998 by the wheel tax. That would have paid a lot of bond payments on schools. Or at least paid for more school supplies so you don't get stuck for $100 or so in fees and supplies at the beginning of every school year. Remember, when you hear that a new tax is going for education, there is one guarantee and one strong likelihood. The guarantee is that it will never be repealed and the likelihood is that sooner or later education will be sacrificed for another use.

Rutherford County Wheel Tax Revenue and Education Debt Service Expenditures from July 1 1990 till the end of June, 1998

Fiscal	Wheel Tax	Education Debt Service
Year	Revenue         Expenditures
1991	$1,800,308 	 $7,044,933 
1992	 1,905,149 	  7,362,091 
1993	 2,024,779 	 10,305,969 
1994	 2,203,932 	  9,800,406 
1995	 2,172,465 	  9,742,277 
1996	 2,206,841 	 12,281,280 
1997	 2,317,568 	 12,643,320 
1998	 2,429,991 	 12,899,438 

Recent Property Tax Rates*

        County    M'boro    Smyrna
1972	$2.68	   N/A	     N/A
1973	$3.32      $2.40     N/A

1985 - no more funds from the Wheel Tax goes to education
1986	$1.97	$1.65	$0.62	M'boro residents pay $3.62 per $100 
1987	$2.20	$1.75	$0.62	Lavergne and Smyrna Highs are built 
1988	$3.00	$1.90	$0.62	M'boro residents pay $4.90 per $100 

(So the 1970 county court was right - without the wheel tax in place 
our property taxes would go up a $1.00 to build two new high schools.
but wait! we not only have a wheel tax but it is even higher!)

1995	$3.15	$2.28	$0.48
1996	$3.30	$2.26	$0.48
1997	$3.37	$2.26	$0.48	

* - Property is re-appraised at intervals. Property taxes are adjusted to ensure property owners pay same 'gross' amount of tax. This chart is meant to illustrate the impact the construction of Smyrna and Lavergne High School had on the taxes of Murfreesboro and Rutherford County residents.

Can we please get at least the $10 back for education the original wheel tax was passed for?

That $10 would raise over $800,000 this coming year for education. And wasn't that the county court's intention when they originally passed the wheel tax? And can we get back the 5 cents of the education's share of the property taxes you moved to general debt service last year to cover your raises? A General Debt Service fund that, according to a recent DNJ interview with County Commissioner and Steering Committee Chairman Tina Jones, has reserves. If it has reserves then why was this five cents moved in the first place?

Then-Rutherford County Finance Director Paul Long corrected me to some degree on this:

General Debt Service did not get the five cents. That increase went to the General Fund. Next year five cents will generate $1,165,130 for all funds except schools, $953,075 for schools.

So in 1998 the Rutherford County School Board was so frugal they had money to spare

So OUR Rutherford County Commissioners took 5 cents of the Rutherford County School Board's share of the property taxes and transferred it to the general fund. After all, ya can't be raising taxes in an election year but ya had to cover those raises somehow... This isn't an election year so are my taxes going up now to cover those raises???

But in 1999 that same Rutherford County School Board was so extravagant the county commission couldn't trust them to build a new school!!!

Every school the Rutherford County School Board has built in recent history has come in under budget. We don't see a lot of County Commissioners commenting about that.

And they are still fooling us today.