Memphis may lower tax rate 8 cents, preventing revenue windfall

Barring City Council changes, Memphis will lower its property tax rate 8 cents this year, preventing the city from receiving a windfall from last year's countywide reappraisal.

During a committee meeting Tuesday, council members briefly discussed an ordinance to lower the rate to $3.19 per $100 of a property's assessed value. Memphis Chief Operations Officer Doug McGowen wouldn't say whether Mayor Jim Strickland will recommend a $3.19 rate when he presents his 2018-19 proposed budget at 3:30 p.m.

The mayor has said of previous budgets that he wanted to avoid raising property taxes in a city that pays taxes at a higher rate than the rest of the state.

The council, which has kept property taxes level in recent years, could opt to further tweak the tax rate to give taxpayers a true tax cut or hike.

The council set the property tax rate last year at $3.27 based on a state formula designed to keep the city from using the reappraisal to receive a revenue windfall at the expense of taxpayers. However, the city overestimated the number of reappraisal appeals, throwing off the calculation, Memphis Chief Financial Officer Shirley Ford said.

Lowering the rate to $3.19 would effectively keep the city's tax revenue at the same level as it was before the reappraisal, not counting normal economic growth, Ford confirmed.

Even though the city received too much revenue last year, the city will receive $9.6 million less this year, balancing the books, as required by state law.

Still, residents will see a tax cut compared to last year — even if not to two years ago — council member Worth Morgan said during the meeting. "That's big news."

Shelby County will also have its property tax rate reset after collecting $18 million to $25 million more than expected due to the lack of reappraisal appeals, barring County Commission action. Some commissioners said they will propose a true tax cut.

Reach Ryan Poe at poe@commercialappeal.com or on Twitter at @ryanpoe.