SUMMARY:

            This resolution would amend the constitution to authorize reducing or eliminating ad valorem taxes and replacing them with sales tax not to exceed 1%.

REQUIREMENTS:

• Local taxing jurisdictions would be authorized to levy, impose and collect a local sales tax within their jurisdictions.
• Independent school districts and municipalities within a county or partially within more than one county would adopt concurrent resolutions for a 1% sales tax for the joint areas of the district as the taxing jurisdiction.
• Up to 1% could be presented in a referendum:
• • School systems, both county and independent school systems in a joint resolution within a county, could levy enough to offset the maximum net millage rate for operations and debt, but no more.
  • The same applies to municipalities and counties.
• If only a county levy, the maximum rate could not exceed 0.5%.
• The same would apply to a sole municipality levying the tax on its own.
• There would be a limit of 4 years initially, in addition to any state-wide and other local sales tax.
• Once appropriate resolutions were passed, a special election would be called:
• • The special election would be limited to the date of a state wide general primary or general election.
  • The resolution would have to state the time limit of the levy, the maximum rate of tax and the maximum ad valorem millage rate imposed for the duration of the sales tax.
• The authority to collect ad valorem taxes for current or future indebtedness would continue.
• This sales tax would not count toward any general law limit on the maximum local sales tax that can be levied.
• This sales tax would not apply to food and beverages beyond other sales taxes in effect.
• Exemptions would include:
• • Generation of energy
  • Use of energy in manufacturing goods
• The maximum millage rate would exempt property related to energy production or use in manufacturing of goods.
• Proceeds from this sales tax would count toward a school system’s equalization grant formula [counts toward wealth per student].
• The General Assembly could “further define and implement such tax.”
• The use of the tax would be limited to reducing the millage rate only.
• In shared resolutions of school systems, distribution would be based on the latest FTE count prior to the referendum to approve the tax.
• Cities and counties would have an intergovernmental agreement for distribution.
• The reduction would be dollar-for-dollar and appear on each local taxpayer’s bill.
• If a state of emergency should be declared by the President or Governor, or if necessitated by a court order, the maximum net millage rate set in the referendum could be exceeded if approved by 3/5 majority vote of the governing body or each of the bodies in a shared resolution.
• The tax could be re-imposed in a referendum for up to 8 years.
• The funds generated are subject to an annual audit.
• The funds cannot be redirected by court order.
• The tax can be ceased by a majority vote in a referendum for that purpose.

NOTES:

• A question could arise regarding funding equity in those counties/cities with limited retail sales.
• If the General Assembly can “further define and implement such tax,” does that open the door for them to direct local governmental bodies regarding if, how and when such taxes could be levied and used?  Or, could they take the tax to use statewide?
• If the maximum millage rate is locked in for 4 years (or 8 if re-imposed), but is under the allowable maximum of 20 mills, could inflated costs or statewide austerity cuts force systems to turn to TANS, which would be repaid with ad valorem taxes and, therefore, result in a greater overall cost of school operations that would fall on the backs of ad valorem taxpayers?