Questions and Answers About the Council's Decision
City of Jackson
Sales Tax Frequently Asked Questions
Why did the city council vote to redirect the $12 million that it was giving Madison County for schools to its own general fund?
The city wants to be able to say in how the money collected inside the city is used.
Do city residents fund schools?
Absolutely, through tax revenues generated within the city limits. City residents, who make up about 2/3 of Madison County residents, contribute 91.4 percent of all local funding that goes to schools. This money comes from sales tax revenues generated within the city limits and city residents’ share of county property taxes. This means city residents fund nine out of every 10 school children in Madison County.
Will the schools get less money next year?
No. Due to state laws dictating maintenance of effort, the county – which is responsible for funding local schools – will have to make up the difference in any decrease of funding so schools do not lose funds. Since 2004, the county has been using the increase in sales taxes and the city’s gift to decrease the amount of property taxes it uses for schools. The county will have to divert a greater share of its property tax revenues or find another way to meet its obligations to schools. Its current maintenance of effort for schools is $47.5 million.
Don’t most public school children live in the city limits?
We don’t know the breakdown of county-only and city-resident school children because the schools tell us they don’t keep those records. Based on the general population breakdown, however, we would estimate that 6.5 out of every 10 children live within the city limits. Currently, city-generated revenues fund 9 out of 10 children.
Can you explain the breakdown of sales tax revenues?
Sales taxes can be confusing. The state mandates that half of all local option sales tax revenues go to schools. So, by law, Jackson-Madison County schools get half of a 1.5-cent local option sales tax passed in 1966 and half of a second 1.25-cent local option sales tax passed in 1989. The second half of the revenue from each sales tax go to the city and the county, based on where the money was generated.
In 2016, local schools received a total of $37 million from the $1.5 and the $1.25 sales tax revenues that were generated inside the city limits. The city donated $12 milliobn of that total – its share of the $1.25 cent sales tax.
Did the 1989 referendum require the city to give 100 percent of additional sales tax revenues to schools?
No. The city passed a resolution in 1989 to donate its share of the new sales tax revenue to the schools. That donation has increased from $4 million in 1990 to $12 million this year.
Can the city council direct the city’s portion of the 1.25 sales tax to the city’s general fund?
Yes. In 1989, the city declared its intent to make the donation with a resolution passed by the city council and signed by Mayor Charles Farmer. The city did not sign a contract with the county or school system. Its donation has been a courtesy. The city and county have signed contracts on funding other entities, such as the public library and airport, but they do not have a signed contract concerning the city’s portion of the 1.25 sales tax.
Is the county paying schools its fair share?
The county’s school funding via property taxes has steadily declined in recent years from about $15 million to about $6 million. This is the same amount schools received from county property taxes in 1991. The city’s donation has enabled the county to defund schools and prioritize other county budgetary issues.
Is the city willing to discuss giving more money to the school system in the future?
Yes. The city council’s vote opened the door to discussions about school funding between the city and the school system. The county’s decision to take this issue to court, however, closes the door to discussions between the county and the city about properly and fairly funding the schools.
Are the city’s finances in good shape?
Yes. The city, however, has many responsibilities. The city funds police and public safety, roads and infrastructure, parks and recreation, and many other municipal services that make Jackson a great place to live and that invite others to spend money here. The city must also fund a growing list of infrastructure improvements. The city council’s action provided the city with greater flexibility over a portion of its budget to help it invest in its future and continue to fund vital services.
What would the city do if it didn’t redirect the $12 million?
The city’s budget committee was discussing several options that included a tax on fast food, a stormwater use fee, and increasing property taxes to maintain city services.
What will the city do with the $12 million diverted to the general fund?
Part of the money will be used to invest in the city’s infrastructure and future so that it will continue to grow, attract jobs and increase its revenue base. Here is a $62.6 million list of needed capital expenses…
- Widen and repair turn lanes to Dr. F.E. Wright Drive: $2.5 million
- Repair and build sidewalks on Highland: $0.5 million
- Downtown infrastructure improvements: $2.5 million
- Replace police cars and fire department equipment: $2 million
- Purchase land for industrial park to create more jobs: $2.4 million
- Stormwater repairs: $1.5 million
- Upgrades to Old Hickory Boulevard: $1.7 million
- Rebuilding Vann Drive: $5 million
- Widening Campbell Street: $3.5 million
- Upgrading McClellan Road: $8-12 million
- Funding American Disabilities Act court order: $8.5 million
- Rebuilding Airways Boulevard: $8 million
- Streetscape improvements to North Highland mall area: $3 million
- Streetscape improvements from Old Hickory Boulevard to Rosenblum Drive: $2 million
- Renovations to Carl Perkins Civic Center: $4.5 million