Tenn. Town’s TABOR Pays Off for Taxpayers

Published September 1, 2005

Unlike government officials in many fast-growing communities, who point to growing demands on services to maintain or hike taxes, the city of Spring Hill, Tennessee, 30 miles south of Nashville, is pointing to lower taxes as a reason for its growth.

Rapid growth has brought about a $515,000 budget surplus in the town of 19,000 over the past two years, and the mayor and other city officials are returning the surplus to taxpayers.

City’s TABOR Rules

They’re doing it under the terms of a city Taxpayer’s Bill of Rights, which limits growth in taxes and returns excess tax revenues to the taxpayers.

“In July 2003 we passed a Taxpayer’s Bill of Rights which says any [proposed] increase in taxes would go to the public in the form of a referendum, and any surplus in the general fund would go to citizens in the form of a tax decrease,” said Spring Hill Mayor Danny Leverette. “We’ve been chipping away at our property tax rate. It’s 19 cents [per $100 of assessed value] now and was 41 cents just five years ago.”

Eliminating the 19 cents per $100 property tax comes out to $350,000, and the city in July decided to rebate that money. Leverette said he fully expects the city to rebate additional money to equal the $515,000 surplus.

“We are fully committed to doing this,” he said. “I expect the rest of the refund to pass unanimously.”

‘The Citizens’ Money’

He said the response from local citizens has been great.

“I’ve had extremely good, positive feedback from most people,” Leverette said. “There are a few naysayers, who say, ‘What if? What if? What if?’ But our view is it’s the citizens’ money. If we don’t need it, we should give it back.

“If we get in a situation where we have to request a tax increase, the TABOR requires us to make a good case for it to the citizens,” Leverette said. “With the past five years of showing we want to give people their money back, I think we have some credibility. They’ll understand if we ask for an increase and make a good case for it.”

Leverette said Spring Hill’s low taxes, proximity to Nashville, and nearby highways have made the town an attractive spot for new residents and small and mid-size retailers. The first big-box retailer, a Home Depot store, was scheduled to break ground late this summer.

“We’re issuing 150 to 160 building permits a month,” Leverette said, adding that the increased building and retail activity is boosting tax receipts. He projects the city will approximately double in size in 20 years.

Steve Stanek ([email protected]) is managing editor of Budget & Tax News.