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Local leaders hope to return to state revenue-sharing policy

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Germantown is joining forces with the Tennessee Municipal League to restore the historical revenue-sharing relationship between the state of Tennessee and local governments. This partnership is aimed at restoring the 1947 arrangement in which the state began sharing 4.6% of each year’s total state sales tax collections with cities. This move is an effort to recognize the collective contribution of cities as the state’s economic engine.

The need for this restoration stems from the changes the state made in response to a 2002 budget crisis. The state increased the state-shared sales tax (SSST) from 6% to 7% but prevented cities from receiving their share of the 1% increase. This also prevented cities from benefiting from the increase in the single-item sales tax cap for items priced above $1,600. In fiscal year 2021 alone, these changes resulted in an estimated loss of $651,300 in SSST for the City of Germantown. Since the adoption of the new sales tax rate and related single-article sales tax cap, approximately $835 million has been diverted from Tennessee’s municipalities.

As sales tax revenues continue to grow and show strength, the return to the previous SSST sharing relationship between the state and its cities would provide relief to local taxpayers and assist local governments in meeting the increasing demand for services. This restoration would also promote further economic expansion and afford residents a high quality of life that has allowed the state of Tennessee to prosper.

Mayor Mike Palazzolo is encouraging residents to get involved and make their voices heard by reaching out to their state representatives, senators, and congressmen. “I encourage our residents to get active and engaged by reaching out to our representatives and senators, making them aware how important this revenue is to Germantown and how it needs to return to our people,” said Mayor Palazzolo.

Residents who support the resolution may contact their respective state representatives, senators, and congressmen via email or phone. Senator Brent Taylor can be reached at [email protected] or by phone at (615) 741-3036. Representative Mark White can be reached at [email protected]tol.tn.gov or by phone at (615) 741-4415. Congressman David Kustoff can be reached through his website at https://kustoff.house.gov/contact/email or by phone at (202) 255-4714.

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