It is the county commissions decision to opt in or opt out, said County Mayor Randall Hutto, explaining the commission would have to pass a resolution to request a referendum of the people on the tax increase.
Should the commission pass such a resolution, Hutto said Lebanons request for a referendum would be null and void and all county citizens would vote during the Nov. 6 General and City Election if they want the increase.
The original proposal came from Lebanon Mayor Philip Craighead to raise additional money for the city. Lebanon Commissioner of Finance and Revenue Russell Lee said the 0.5 percent increase would generate about $3.5 million for the city.
Lee explained when sales taxes are collected within the Lebanon city limits the entire amount goes to the Tennessee Department of Revenue. There, Lee said the state subtracts an administrative fee of 1.125 percent before sending the local share to Wilson County.
County Finance Director Aaron Maynard said when the county receives the local sales taxes, half of that amount is split between the Wilson County School System and Lebanon Special School District.
The first half of sales taxes, period, goes directly to both school systems, Maynard said.
Hutto said LSSD schools receive 16.6 percent of that first 50 percent of local sales taxes and the county system receives 83.4 percent. Maynard noted that is based on the average daily attendance of the two systems.
State statute requires the county government to subtract a 1-percent administrative fee from the local share and the remaining amount is split between the municipalities and county.
Lee pointed out the percentage received by the city is slightly less than 50 percent of what is generated within the city limits.
Of the total taxes collected, the city gets 48.9 percent of that total, he said.
Hutto said if the county chose to increase the sales tax by 0.5 percent and it was approved by referendum, the city and county would share the additional revenue, but all of the countys portion would go to benefit education.
The county government wouldnt benefit, this would all go to education, he said. Wilson County Board of Education would receive the revenue.
Maynard explained all sales tax revenue is allocated into certain funds that are used to fund county schools. He said a portion goes into the General Purpose School Fund, which he said is used to finance the cost of the day-to-day operation for the system.
The remainder of the countys sales taxes is put into the Rural Debt Service Fund and Special Purpose Debt Service Fund, which Maynard said are used to pay debt on school capital projects such as building new schools.
We use that money to pay the education debt, he said.
Bonds are issued for elementary school projects from the two funds, and Maynard noted other bonds, including those for building high schools, are issued from a different fund.
Hutto ran an estimate of what a 0.5 percent increase in sales taxes countywide would mean for local schools. He said $2,066,558 million would be generated by the increase for the county schools while the LSSD would receive an additional $617,083.
Those increases would be part of the initial 50 percent that is given to the school systems. Hutto also said the county would receive an additional $1,429,279 from the increase for the debt service funds, which is not part of the first 50 percent to schools.
County Commission Budget Committee was expected to meet Thursday night and Hutto said he would bring up the sales tax increase to the committee. He said the full commission would consider it during their Monday, Aug. 27, meeting.
The county commission needs to weigh what this will mean for education in Wilson County, he said, adding the final decision would be up to the citizens.
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