City may end taxation of personal property

The long-hated personal property tax may be abolished next month by the City of Clarendon.

City Administrator David Dockery said the issue arose during a discussion of redirecting sales tax revenue at the regular city council meeting last Thursday, December 13.

Aldermen were considering asking voters to redirect what is technically called “the additional sales and use tax,” a half-cent sales tax that goes towards property tax rate reduction. If the voters okayed the measure, the council would abolish the personal property tax, which taxes cars, boats, recreational vehicles, and other such property.

But Dockery said as the aldermen looked at the big picture of the city’s revenue, there developed a sense that they would rather just abolish the personal property tax regardless of the results of a ballot initiative.

“It will be on our first agenda in January to eliminate the personal property tax,” Dockery said.

The personal property tax generates about $51,000 per year for the city, but Dockery says he believes the city can absorb that loss of income if sales tax revenues continue to rise. The city set a record for sales tax revenues in 2018.

If aldermen do vote to kill the tax next month, the action would not go into effect until the 2020 tax year since the tax has already been levied and partially collected for 2019.

The aldermen did approve ballot language on the sales tax question. City voters will be asked in May whether they favor or oppose “The abolishment of the additional sales and use tax in the City of Clarendon and the reallocation of the sales and use tax at the rate of one-fourth of one percent to general revenue and one-fourth of one percent to provide revenue for maintenance and repair of municipal streets.”

The additional sales and use tax currently has the effect of reducing the city’s ad valorem property tax rate by about 20 cents per $100 valuation. If that sales and use tax was redirected, Dockery says it would dedicate about $50,000 per year to street maintenance and about $50,000 to general revenue.

Regardless of the ballot results, the city’s ad valorem tax rate is going to drop for 2020 as the city pays off indebtedness in 2019. Dockery projects that with the current debt component removed from the tax rate and if voters approve redirecting the additional sales and use tax, the city’s overall ad valorem rate could go down by about 8.6 cents.

Dockery also cautions that there are a lot of factors involved in calculating the ad valorem rate – such as property appraisals, exemptions, etc. – that make it difficult to predict.

In other city business, voted to raise the radio tower lease fee from $117.50 to $230 per month and revised the tower lease agreement.

Change orders to the USDA water infrastructure project totaling about $4,675 were approved.
A resolution to allow city employees to serve on the boards of non-profit organizations without having to take unpaid time off was approved.

Aldermen voted to appoint Eulaine McIntosh to the vacant seat of former alderman Beverly Burrow.