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by Joe Sullivan

With the benefit of hindsight, it’s easy to conclude that County Mayor Mike Ragsdale erred by basing his Knox County budget on a wheel tax increase that was subject to repeal by referendum. Neither Ragsdale nor the County Commission majority that approved a $30 wheel tax increase by a 16-3 vote in June foresaw the groundswell of opposition that manifested itself in the 25,000 signatures on a petition for a Nov. 2 referendum that seems virtually assured.

Now Ragsdale faces the daunting challenge of getting voters to approve a tax increase which is akin to making water run uphill. But without the $12 million in new revenue from the wheel tax, Knox County is destined to go downhill in its funding of much-needed community improvements and services too numerous to name here.

Ragsdale’s initial parry has been to submit to County Commission his recommendations for county budget cuts if the $12 million in new revenues is not forthcoming. The cuts would eliminate some 30 capital projects that would bring benefits to every section of the county. Grants to more than 100 not-for-profit organizations that have relied on the county for support for many years would be cut in half. And Ragsdale would impose a 2 percent reduction in the budgets of every component of county government except for schools. Readers should carefully consider the impacts of all of these cuts as listed on the county’s website (knoxcounty.org).

Topping the list is the $40 million (later reduced to $25 million) that Ragsdale had recommended for a new main library that would adorn downtown. The deficiencies, spacewise and otherwise, of the 30-year-old Lawson McGhee Library are apparent to its patrons, but evidently there are not enough of them to carry much political weight. In the farther reaches of the county, where most residents seem to identify with their own branch library (of which there are 17 altogether), opposition to spending $40 million on a new downtown library is predominant. Indeed, it may well have been the primary impetus for the success of the call for a wheel tax referendum. And County Commission went further than the county mayor by voting last week to kill the $40 million undertaking regardless of the referendum’s outcome.

It would be wrong, however, to perceive that killing the library obviates the county’s need for additional revenues. Annual debt service that would have been required to finance that project accounts for only about $3 million of the $12 million from the wheel tax that Ragsdale relied on in his budget. In the absence of those funds, overall county revenue is projected to rise only an anemic 1.3 percent to $534 million in the current fiscal year, from $527 million last year. After allowing for the 3 percent pay raise for county employees that Ragsdale is determined to preserve, little room is left for the many other commendable initiatives that have been the hallmark of the Ragsdale administration.

It also needs to be borne in mind that the tax increases he has sought are less than those incurred during either of the four-year terms of his predecessor, Tommy Schumpert. Also taking into account proceeds of the $6 wheel tax Ragsdale introduced a year ago, the $14.4 million in new revenue generated amounts to 2.6 percent of Knox County’s now jeopardized $546 million budget. That’s less than half the 6 percent boost in county revenues Schumpert got from a $27 million property tax increase in 1999 and is also lower in percentage terms than the boost realized from a $10 million property tax increase in 1995.

The Ragsdale tax increases look even more constrained when comparisons of economic growth rates are taken into account. The Schumpert increases came amid—and despite—the economic boom times of the 1990s, whereas Ragsdale took office in the midst of a recession that put a crimp in county revenue growth from a weakened economy. That weakness also prompted a cutback in state funding of local governments that has worsened their budgetary pinch.

More than half of Tennessee’s 92 counties have wheel taxes that average just about the $36 rate per vehicle that took effect in Knox County on July 1. Again, by hindsight, the county would have done much better to meet its revenue needs with a relatively modest boost in property taxes rather than a wheel tax, because a property tax increase is not subject to repeal by referendum. But neither Ragsdale nor County Commission are prepared to resort to raising property taxes at this time, in part because it would thwart the right of the electorate to vote on the tax increase that’s been placed before it.

It’s axiomatic that making the case for a tax increase depends on meeting needs that voters can buy into. The paramount need in Knox County at this time—one that Ragsdale did not adequately address in his budget—is for a new high school in West Knox County. Severe overcrowding at Farragut High School today promises to extend to Karns and Bearden and perhaps to Powell, as the county’s population growth continues to be concentrated in their zones. And the sheer size of these schools militates against their expansion.

In his motion that killed the new downtown library last week, County Commissioner John Griess succeeded in getting the $40 million reallocated to new school construction. But by keeping the money under Commission’s control, he did so in a way that exacerbated strains with the school board, which is vested by state law with responsibility for deciding how school funds get spent.

It’s now imperative that Commission and the school board start pulling together for a change. Once they’ve done so, a comprehensive school construction plan that addresses needs in all sectors of the county should be forthcoming, thus allaying the perception elsewhere that the affluent western suburbs are getting all of the attention. Center city dwellers should recall that a decade ago suburbanites uncomplainingly paid a big share of the cost of what were then the community’s most pressing high school needs: namely, the $30 million renovations of Fulton and Austin-East.

With election day only two months off, time is of the essence, And Ragsdale needs to start exerting the same kind of positive leadership that former city Mayor Victor Ashe did when he won voter approval for a local sales tax increase in a 1988 referendum.

September 2, 2004 • Vol. 14, No. 36 © 2004 Metro Pulse