May 29, 2012
There has been a lot of discussion and hostile ads concerning the local PILOT (payment in lieu of taxes) program which allows local companies to avoid paying property taxes at their full rate, sometimes for up to 40 years. I decided to do some investigating to see what was happening in the three other major Tennessee counties, Davidson, Hamilton and Knox counties. I have attached the state of Tennessee report for those counties plus Shelby County. The counties are numbered in the second column as #19 (Davidson), #33 (Hamilton), #47 (Knox) and #79 (Shelby).
You will see that Shelby County has a whopping $2.74 billion dollars of property not paying full taxes due to the Pilots.
What this says to me is that the way to increase local business and job investment is to lower the local tax rate, not give away the store on the future promise of higher property tax collections. Memphis is a poor city but we have a local government equal to the wealthier cities in Tennessee, hence the higher property tax rate. This has the effect of driving away the source of the property taxes.
Here is an idea. Why not modify the local Pilot agreements to say that if we lower the property tax rate by 5%, that the Pilot recipients will pay an additional annual tax payment equal to 5% of the annual tax rate they should be paying on their assessed value. Just an idea.
PILOT TOTAL PROPERTY TAX RATE
(estimated value) Combined City & County
Shelby County (Memphis) $2.74 billion $7.29
Hamilton County (Chattanooga) $1.92 billion $5.356
Knox County (Knoxville) $293 milliion $5.50
Davidson County (Nashville) $10.6 milliion $4.69