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Civics 101: How your county property taxes are raised, distributed

J. H. Osborne • Apr 22, 2019 at 2:02 PM

The county property tax is the most important source of revenue for county governments. The tax is levied on all real and personal property based on its classification and value unless the property is exempt.

The county legislative body sets the rate. If a county does not adopt a budget until after the new fiscal year begins, operations continue under a continuation budget remaining in effect until a new budget is adopted.

Under state law, county property tax revenues may be used only for the purposes for which the tax is levied. Each year the county commission not only sets the total tax rate, but also how that rate is divided among various functions of county government. The law means once that division is set, funds can’t be transferred from one use to another during the fiscal year.

The fiscal year runs from July 1 of one year until June 30 of the next year. We are currently in fiscal year (sometimes abbreviated as FY) 2018-2019. Sometimes when the abbreviation FY is used, it also is designated to be simply the year in which it ends; for example, FY2019 ends June 30, and FY2020 begins July 1.

For the current fiscal year, Sullivan County’s property tax rate — paid by city residents as well — is $2.55 per $100 of assessed value. The breakdown: 79 cents goes to the county’s general fund (which includes public safety, contributions to nonprofits, and general government); 1.9 cents for solid waste; 7.5 cents for the county’s highway department (which provides no work in the cities); 135.3 cents for general purpose schools (split with city school systems based on enrollment because city residents pay county property taxes); 9.3 cents for school renovation projects (no longer shared with city school systems); and 22 cents for debt service (to pay off loans).

Of Tennessee’s 95 counties, nine increased their property tax rate for this fiscal year, ranging from 1 cent to 4.88 cents (a percentage range of from less than one percent to 19.82 percent). Sullivan County was not among them.

Each penny of Sullivan County’s $2.55 property tax rate this fiscal year was projected to generate $372,439 in revenue, based on 96 percent of property owners paying their tax bills on time. The amount a penny generates for counties varies dramatically across Tennessee, from $9,168 per penny in Lake County to more than $3 million per penny in Davidson County (Metro Nashville-Davidson).

Source: The County Technical Assistance Service at the University of Tennessee (a taxpayer-funded agency).

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