Last week, state lawmakers passed a bill to repeal the state’s Hall Income Tax, which is a tax on interest from bonds and notes and dividends from the sale of stocks. The bill passed overwhelmingly last week by the State House and Senate calls for the tax to be reduced by 1 percent each year until it would be eliminated in 2022, starting with the upcoming fiscal year when the tax would drop from 6% to 5%.
If Governor Bill Haslam were to sign it into law, counties and cities across Tennessee will lose revenue from the state.
Among the cities in WYSH’s coverage area, Oak Ridge could be the most adversely affected as city officials estimate that when the tax is eliminated completely, it would mean the loss of between $500,000 and $700,000 in revenue for the city. Estimates vary on its impact on the budget that begins on July 1st as city officials tell our partners at Oak Ridge Today it could mean a loss of $119,000 in revenue and state officials estimate the revenue loss at a more conservative $81,000. If Haslam signs the bill into law, Oak Ridge leaders say it would require an additional $50 million to $100 million a year in new sales tax revenues to make up for the lost funding.
As the bill is still awaiting the governor’s signature, Oak Ridge and dozens of other cities across the state are still lobbying for him to veto the legislation. Haslam has previously said that he would have preferred a bill with just a one-time cut from 6 to 5%, while leaving future cuts to legislators down the line as economic conditions dictate.
Either way, Oak Ridge leaders are working on contingency plans as the budget process begins to ramp up.
Taking a look at other cities and counties and how they would be affected this year if the governor signs the bill, Anderson County would lose an estimated $25,619 in the fiscal year that begins July 1st.
As far as cities in Anderson County, Clinton would lose an estimated $15,086 this year; Norris would lose an estimated $5414; and Rocky Top would lose an estimated $331.
In Oliver Springs, which straddles three counties, the state estimates a loss of $1713. Roane County would lose an estimated $18,113. Kingston would lose an estimated $11,469; Harriman would lose an estimated $4536: and Rockwood would lose an estimated $3551 in the 2016-2017 fiscal year.
If the measure is signed into law, Campbell County would lose an estimated $14,313 in state revenue this year, while cities like Lafollette would lose an estimated $7402 in revenue; Jacksboro an estimated $1898; Caryville would lose an estimated $1616 and Jellico could lose an estimated $608.
If the measure becomes law, Morgan County would lose an estimated $2179 this year while the towns of Wartburg and Sunbright would lose $677 and $297, respectively.
Again, the repeal of the Halls income tax is still awaiting the governor’s signature and if he vetoes the move, these projections will be moot, but counties and towns across Tennessee are bracing themselves just in case. Larger cities in the state could see significantly larger revenue decreases.
The Hall income tax was enacted in 1929 and is named after the State Senator who introduced the legislation and is only imposed on individuals or other entities receiving interest from bonds and notes and dividends from stock. There are exemptions from the Hall tax for taxpayers 65 or older who meet income requirements.
For much more on this story, including an in-depth look at how the possible repeal of the Hall tax would affect Oak Ridge, visit our partners at Oak Ridge Today.