frank_talk (2005-44)

Bad Moon Rising

by Frank Cagle

A 20-year effort through three governors to establish a state income tax in Tennessee crested in 2002 with a session-long battle culminating in a failed vote in the House of Representatives. The political earthquake resulting from the horn-honking, and the radio talk show-organized protests, is still producing aftershocks that may have even more significant consequences.

The anti-income tax fight led to the formation of anti-tax organizations, e-mail lists, anti-tax blogs, and a statewide organized effort to fight tax increases of all kinds. The latest campaign will send shock waves through courthouses in all 95 counties.

Knox County government narrowly avoided a budget crisis last year, when a petition drive resulted in a referendum vote on a wheel tax. Only the threat of an alternative property tax increase saved the wheel tax increase.

It used to be fairly simple to get a measure on the ballot. You pick a low turnout election, you get a few petitions signed, and you have a ballot initiative. It occurred to the business community that it would be devastatingly simple for some environmental group to force a referendum to stop a major development project. While the environmentalists were busy organizing, the business lobbyists put through a little-noticed bill on the last day of a legislative session, raising the bar for ballot initiatives significantly. In fact, it made it impossible for some citizens’ groups to get enough signatures on a petition to force a referendum. The bar is so high, it was thought, only a professional paid staff would be able to get enough signatures to have a referendum. (So only the well-off could mount a referendum action; i.e. downtown hotel owners fighting a city-subsidized convention center hotel.)

What was most surprising about the Knox County wheel-tax referendum effort is that more than 25,000 signatures were generated to get the measure on the ballot. The great equalizer in the process is the Internet. You put up a petition on a website, you organize with email messages, people download petitions, get signatures and send them in. Local leader Gary Sellers had help from Tennessee Tax Revolt to get the word out, through its e-mail list, and to organize the petition process.

Tennessee Tax Revolt has launched a petition drive in Metro Nashville, using the methods perfected in the Knox County wheel tax fight, requiring a referendum for any property-tax increase. At present, of course, a property-tax increase only requires a vote of a county commission, or in cities, a vote of the city council. The property tax is the go-to alternative for local governments that need more money. If every proposal to increase property taxes were to require a referendum, the onus would be on local governments to justify the increase and to do a selling job, a time-consuming and politically damaging process.

Tennessee Tax Revolt is using the Internet to organize volunteers in Davidson County to accumulate 30,000 signatures. The move comes after a recent Nashville referendum to raise the sales tax was defeated by a wide margin and the property tax was raised by metro council. The overwhelming defeat of the sales tax initiative for schools may have been a factor in the recent announcement by Mayor Bill Purcell that he will not run for a third term.

There have been a series of local tax skirmishes around the state for at least two years. Each has been an isolated spat, seemingly of interest only to locals. But if you look at the trend, if you look at the more and more sophisticated anti-tax efforts, and if you consider the mounting numbers of the anti-tax membership rolls, the most significant news story in the state has been getting scant attention.

If the effort in Nashville is successful, it will be only a matter of time before similar efforts are launched in county after county across the state. Nashville voters turned down the sales-tax increase. Increasing property values in Davidson County over the last 15 years, combined with some property-tax increases, have left a significant group of older voters feeling put upon and resentful of further tax increases. A significant amount of the new home construction that would have provided additional tax income to local government has shifted to the suburbs. New housing starts have soared in neighboring counties. It would appear that a referendum to put controls on property-tax increases in Davidson County will find a receptive audience. Community leaders in Nashville will have to mount a massive counterattack if the movement is to be stopped.

Remember that Metro Nashville, the target of this tax outrage, has the lowest property-tax rate of any of the state’s major cities. The rate in Nashville is $4.04, while the combined city-county rate in Knoxville is $6.01.

County and city mayors across the state need to be watching closely.

Frank Cagle is a political analyst and the editor of Knoxville Magazine . You can reach him at frank@frankcagle.com .

© 2005 MetroPulse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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