McMinnville officials have included a 19-cent tax increase in the 2011-12 fiscal year budget. It passed, but not without generating some confusion and dividing the Board of Mayor and Aldermen.
The measure passed 4-3 with Mayor Norman Rone, Vice Mayor Everett Brock, and Aldermen Clair Cochran and Billy Wood voting for the measure. Aldermen Rick Barnes, Jimmy Haley and Junior Medley voted against it.
When discussions began regarding the fiscal year budget, Brock made a motion to adopt a 15-cent tax increase.
“So, it is your recommendation to not go with 19 cents as recommended,” said Cochran. “Only 15 cents.”
City administrator David Rutherford’s recommendation, made when discussions began, was to include a 19-cent tax increase.
“I don’t think we need it,” said Brock.
Wood said even with a 19-cent tax increase, the tax rate will be lower than it was 20 years ago. Twenty years ago, the tax rate was $2.19. Today, the tax rate is $1.90.
“Even with a 19-cent increase, the tax rate will be 10 cents less than it was 20 years ago,” he said. “It will be $2.09.”
Without a tax increase, the city’s projected ending balance will be $2 million in June 2012.
Rutherford says the city’s cash flow has improved. However, officials are trying to correct some past mistakes that led to the problem.
“We got in this situation because we did a foolish thing in 1969 by agreeing to give away local option sales tax,” Rutherford said. “Then, we tried to lower property taxes. The extra money in the budget will be used to make sure we do not get into the problem again.”
Wood agreed.
“We are trying to put money aside, like Dave Ramsey says, for a rainy day fund. We are trying to put some money in the bank to protect the best interests of the employees and taxpayers.”
Officials plan to begin a Fund Balance Policy that will allow funds to be open and saving to begin. All money deposited will be marked as non-spendable, restricted, committed, assigned and unassigned funds.
The motion made by Brock was withdrawn.
“Seeing that there is no second to my motion, I will withdraw it, as well as my motion to include a 15-cent tax increase,” said Brock.
Cochran made a motion to accept the budget and include a 19-cent tax increase.
Medley was one of those voting against a tax increase.
“I just hate to see the property owners always getting hit with a property tax increase,” said Medley. “Property owners had an increase last year of 19 cents and the year before with 17 cents. I just think that’s enough.”
Budgets require two passing reads before the board. The next regular session is scheduled for July 26 at 7 p.m.