Loss of the Hall income tax could be the reason for some tax hikes
Signal Mountain is facing a possible 22 percent property tax increase, the town council decided not to vote on that increase Monday, but they're still looking for ways to make up the difference of lost revenue from the Hall income tax.
The Hall income tax was a state tax that Tennessee state legislators decided to phase out in 2016. It was a six percent tax on people or businesses receiving interest on bonds and notes, or gains from stock, 37.5% of the tax would go back to where the taxpayer lives.
"The Hall tax has been historically a fairly significant source of revenue for the town," said Signal Mountain Town Manager Boyd Veal.
The phase out of the Hall tax has significantly hurt communities like Signal Mountain.
"It's been as high as $900,000 it's been as low as $400,000/$500,000 so we set a mark of $750,000 as what we needed to replace in lost revenue," said Veal.
In 2016 Signal Mountain received close to $900,000 in revenue, two years later in 2018, it only brought in $500,000. In 2021 the Hall Tax will be completely phased out, bringing in no money at all. Veal said they knew the loss of tax revenue was coming, and they're trying to find ways to make up the difference.
"If those funds aren't generated then we look at the budget and look at what might be cut," said Veal.
But they're not just looking at a tax increase, they're looking at cuts, or other means of fund-raising.
"One of the things we have looked at as an alternate funding mechanism is a sanitation fee because other municipalities do that," said Veal.
He said there are some challenges when something like this is being phased out over a period of time.
"We had discussions about how to approach it," said Veal. "One of the difficulties you have if you look at something that transpires over the course of several years, and you have council elections every two years and you have different people that come in the position that may have a different view or a different idea of how you should approach things so it is difficult to set those long term processes in place."
He said this time of the year is stressful, but his family has lived in Signal Mountain for Generations and he hopes they make decisions to keep the community moving forward.
"Finding answers to the difficult questions that ultimately lead to this community to be a better place to live for future generations and that's tough," said Veal.
It's not just the Signal Mountain community affected by this tax though, it's also Lookout Mountain as well. Lookout Mountain Mayor Walker Jones said, the Hall income tax made up 20 percent of their budget at one point.
He said they're going to have to raise property taxes steadily until they make up for the loss of the revenue brought in by the Hall tax.