Online comments by local citizens in response to some recent guest columns about city and county budgets and taxes have revealed some mistaken notions about the way property tax rates are established in Tennessee cities and counties. I want to set the record straight regarding a couple of misconceptions about property tax that I see being spread in recent public discussions.

On the Oak Ridge Today website, citizen Andrew Howe posted a comment saying:

“The property tax rate should NEVER have to increase. It is basically a percentage of the value of the home, right? And if the value of the home rises (as it should, in line with the cost of living), then the taxes will also rise.”

I can’t quarrel with Mr. Howe’s logic, but his conclusions are wrong. This is because he makes an assumption that is valid in many states but isn’t valid in Tennessee.

Under Tennessee law, when properties are reappraised, state officials calculate—and publicize—the property tax rate that will give the local government the same total amount of property tax that it was getting from existing properties before the reappraisal. (This calculated rate is called the “certified tax rate.”) That’s the new baseline tax rate. If a local government in Tennessee wants to get more property tax revenue after a reappraisal, the governing body has to vote to increase the tax rate above the certified rate. [Read more…]