More information about sales tax, history of City’s donation to Madison County for schools and other facts

More information about sales tax, history of City’s donation to Madison County for schools and other facts

Understanding Sales Tax

The State of Tennessee requires that half of all local option sales tax revenues be spent on local education. Jackson-Madison County levies a 2.75 percent sales tax. The first 1.5 percent, which voters passed in 1966, is divided half to schools and the other half to the City of Jackson and Madison County, based on where the sales tax is collected. In 2016, for example, this meant that about 90 percent, roughly $50 million, went to the city and 10 percent, about $4 million went to the county.

The extra 1.25 percent local option sales tax, which voters approved in 1989, is split the same way – half to the schools and half to be split by Jackson and Madison County. It is this portion of the city’s sales tax revenue that the city has been donating to Madison County for the past 28 years for schools.

History

In 1989, Madison County voters passed a referendum to merge Jackson City schools with Madison County schools. Madison County, which is mandated by the state to provide an education system, would be in charge of funding the new Jackson-Madison County School System.

In a second referendum, Madison County voters agreed to increase the local share of the state sales tax from 1.5 percent to 2.75 percent.

City and county voters passed both measures by a two to one majority.

On May 25, 1989, former Jackson City Mayor Charles Farmer signed a resolution approved by the City Council to give all the city’s half of the extra 1.25 percent sales tax to Madison County for schools. The intent was to give the county the extra money it needed to “level up” services, such as providing more school buses for city students, air conditioning for schools, removing asbestos from school buildings, and increasing salary and benefits for Madison County teachers to be commensurate with what Jackson City School teachers already were being paid.

Both referendums became effective July 1, 1990. The first year of the consolidated Jackson-Madison County School System was the 1992-93 school year.

Some More Facts

  • Since 1990, sales tax revenues collected within the Jackson city limits have generated $680 million for Jackson-Madison County Schools.
  • Since 1990, the part of the Madison County property tax rate used to fund local schools has decreased from $1.29 to $0.20, an 85 percent decline.
  • The number of students in Jackson-Madison County schools has fluctuated from a high of 14,570 students in 2003 to this year’s enrollment of 12,909 students. The school system does not have a method to calculate how many of those students live inside the Jackson city limits.
  • 90 percent of all local money that funds local public education is from taxes paid by City of Jackson residents.
  • Mayor Jerry Gist asked attorney Bill Purcell, former Nashville mayor and state legislator who helped create the state’s Basic Education Plan, to research and give an opinion on whether the city can change the original resolution that gave all its share of 1.25 cent in extra sales tax to the county for schools.
  • Purcell said that since there is no signed contract between the City of Jackson and Madison County, the Jackson City Council can pass a resolution to keep its half of the extra 1.25 percent local option sales tax.
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