Shifting tax burdens show need for new approaches

An article in Sunday's Tennessean (with a followup piece today) highlights the shift in Tennessee's tax burden away from the state level and toward the municipal and county level.

During an era of federal income tax cuts and tight state budgets, Tennessee residents are seeing more of their tax burden shift from Washington and Nashville to their county seats and city halls.

More than two-thirds of Tennessee's 95 counties have raised property taxes since 2003. New tax increases are on the way for the upcoming fiscal year: the Memphis city rate going up 27 cents per $100 assessed valuation, the Davidson County rate rising 67 cents, and tax hikes still being considered late last week in Jackson and Madison County.

More revealing though, the piece points out that local governments are increasingly faced with the question of either raising taxes or cutting vital services. Once specific example cited is from Chattanooga, Tenn.:

In Chattanooga, the Hamilton County Commission has for two years narrowly voted down proposed tax increases, while the local school board has laid off administrators and teachers and threatened to eliminate middle school sports programs.

While Tennessee Gov. Phil Bredesen (D) has been able to restore some of the state funding to counties to relieve the pressure, the state still faces massive cuts to its Medicaid program, TennCare.

It is clear that shifting the tax burden back and forth between counties and states is not a solution to how the government can best serve its citizens; the question we face is how to effectively fund government in a climate so vehemently opposed to tax increases.