Recent Lenoir City Council meeting sparks questions of raised county taxes and intent

ALYSSA B. MARTIN news-herald.net

Increased property tax rates for Lenoir City residents reportedly has many voicing their concerns to the city, while some city leaders claim it’s the county’s doing and not theirs.

During the Jan. 22 Lenoir City Council meeting, Mayor Tony Aikens invited Loudon County Property Tax Assessor Mike Campbell to give a presentation outlining the history of city and county taxes. According to Aikens, the city receives calls and complaints from residents during each tax cycle wondering why their property taxes go up while their property’s value remains the same. However, the mayor says the city isn’t the issue — it’s the County Commission and how frequently it “moves pennies” from various funds as yearly budget meetings are about to take place, Aikens said this is a prevalent issue that citizens should be aware of. Campbell said he and the mayor have been talking about the presentation for nearly two months prior to the January meeting.

WHAT DOES IT MEAN?

The term “move pennies” or “moving pennies” is commonly used when politicians discuss moving tax money from one fund to another. When referring to the county’s actions, it is when they change how much money is allocated to or taken away from the Loudon County Education Debt Relief Fund — right down to the pennies or slivers of pennies.

To understand this better, it’s important to know that Loudon County’s tax money is divided into eight funds. When budgets are made, the Commission decides how much of the tax money should be allocated to each fund.

The current Loudon County fund breakdown is General (0.5747), Public Libraries (0.0129), Highway/Public Works (0.0244), General Purpose School (0.7327), General Debt Service (0.0384), General Capital Projects (0.0000), Highway Capital Projects (0.0052) and Education Debt Service (0.1300).

The fund directly affecting Lenoir City taxpayers is the Education Debt Relief Fund. The 0.1300 means that 13 percent of the Loudon County tax money will go to that fund.

Because Lenoir City residents are also Loudon County residents, they pay city and county taxes, with the exception of the Education Debt Service rate due to Lenoir City having its own school system. This fund is solely to pay toward the debt of the Loudon County School system.

The current property tax rate for living outside of the city is 1.5183, while the rate for inside the city is 1.3883. The city tax rate is 0.99550.

Neither the city nor the county have raised their property tax rate in more than three years.

The last city tax rate change was in 2017, when the rate went down from 1.0615 to the current rate. The last county tax rate change was in 2021, going down from 1.8035 to the current rate. Before that, the rate went down from 1.8587 in 2017.

Regardless of City Council or County Commission, each year when budgets are made and it is decided how much of the tax money is allocated to each fund, money is moved between funds and allocated elsewhere — especially since there’s not been a tax increase.

What Lenoir City residents see as an increase of taxes is the county moving money out of the Education Debt Service causing a larger difference in the city and county rates, ultimately increasing their taxes.

According to Campbell, the city’s full rate increased by $0.03 in 2022 and $0.0195 in 2023. In 2023, the total increase was $69,000.

There are 5,774 taxable parcels in Lenoir City, making the average increase per taxpayer $11.9501.

THE CITY’S STANCE

Aikens believes city residents, specifically those who live in the 5th District as he said in the January meeting, should be “outraged” by the county’s willingness to move money around, raising their taxes.

“I wanted to bring it to the attention because I know they’re getting ready to (have budget meetings), and they (moved the pennies) last year,” Aikens said.

“When you stop and look at it, it’s a huge number of a tax increase to the citizens of Lenoir City by the Loudon County Commission.

“If it is not pointed out, people just don’t understand it just simply because they’re not in that mix,” he said. “They just see those small (changes), they think it’s a penny, and they’re not really looking at their tax bill or the value.”

Although to some citizens the difference in a few dollars increase a year may not be a big deal … to others it could be the difference between fulfilling a prescription or part of their budgeted weekly grocery bill, some say.

“When I’m dealing with somebody on a $120,000 house that’s on low-income or elderly tax relief programs, six bucks makes a difference. Nine dollars makes a difference,” Campbell said. “We hear it all the time.

“I think Loudon County, Lenoir City are both managed well and I don’t think we have runaway taxation, but when we are shifting the pennies, the city residents have picked up a larger portion.”

Though he couldn’t give specific reasons to why the county moves money between funds “so liberally,” Aikens indicated that he doesn’t have faith that the county is as innocent as it supposedly portrays itself when it comes to the topic.

“The county, you know, they talk about how conservative they are and they boast about how they keep the county’s taxes low, but not for Lenoir City residents they don’t,” Aikens said.

When asked about the motive regarding moving money between funds, Aikens said, “I don’t know what they’re doing with it — they’re putting it in the general fund or moving it to some other debt —but it’s still the same results. It’s a tax increase for the citizens of Lenoir City … that we have no control over.

“They go around and say the property tax increase is in Lenoir City, (but) we’re not raising anything. They’re the ones doing the raising and hiding it because it’s such a complicated issue, people don’t realize it because they figure they can get by with it, and I know budget time is coming up again and I don’t want it to happen again.”

THE COUNTY’S STANCE

Loudon County 5th District Commissioner Van Shaver said that the county’s intentions when moving money to and from any fund is dependent upon where they need the extra money for each budget cycle.

That being said, Shaver doesn’t deny that the county’s action can result in a higher tax rate for Lenoir City citizens, despite their lowered city rate.

“When they talked about moving pennies, we have moved pennies and most of that goes back to Loudon County education,” he said. “When the penny is moved, it does change the Lenoir City property tax rate, no question about it.”

According to Shaver, none of what the county is doing is out of ill intent but rather trying to do what they feel is best for the entire county.

“We have the Debt Service Fund, and when pennies go into the Debt Service Fund that can only be used to pay for the county school’s debt. As we pay that debt down and it frees up pennies, they can then be moved to other places — most of the time to Loudon County’s regular education fund — not debt but regular education fund.

“The city gets 35 percent when it comes back — city schools do — so it’s way far different than what Mayor (Aikens) is trying to portray. Nobody has moved anything to spite anybody.

“I guess the mayor was thinking we shouldn’t pay off our debt? I don’t know what he was thinking, but certainly my goal is to pay debt down as quickly as we possibly can.”