Fiscal Year 2018 Budget

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Budget in Brief FY18 taxBudget Resources
Proposed FY18 Budget
Associated Line Item Documents provided to the BMA
FY18 Budget Presentation 
FY18 Capital Improvements Program Presentation
Letter detailing offer to purchase Germantown Elementary, Middle and High Schools
Watch a video explaining the tax adjustment

The City of Germantown’s fiscal year 2018 budget includes a $0.23 tax adjustment. Several of the most important factors impacting this year’s proposed budget are the recent reappraisal and the planned adjustment to the City’s property taxes needed to fund construction of a new elementary school and address the state’s continued phase out of the Hall income tax.

Reappraisal - In Shelby County, property reappraisal occurs every four years. The state requires that local governments adjust the tax rate to a new “certified tax rate” that brings in the same amount of property tax revenue as before the reappraisal. The result is a “roll back” from the current $1.93 per $100 of assessed value to $1.76 per $100 in the proposed fiscal year 2018 budget.

GMSD Growth - The need for a new elementary school and road improvements necessitated by the location of the school, combined with a significant reduction in state shared revenues from the Hall income tax requires the consideration of a property tax adjustment. The new K-5 elementary school including land, site work, construction and equipment has a budget of $27 million. The necessary safety improvements to Forest Hill Irene Road leading to the new school have a budget of $6.5 million. Collectively, this will result in a bond issue of $33.5 million and an increase in debt service payments of approximately $2 million annually.

Hall Tax Repeal - With the state’s planned elimination of the Hall income tax by 2021, Germantown will lose an estimated $7.7 million in state shared revenues over the next four years. Despite City leaders having been outspoken critics of this loss of revenue, the state legislature approved the repeal.


Can the City cut expenses instead of implementing a tax increase?

The proposed budget is the result of six months of work by the City’s budget team. Long hours have been spent working to identify sustainable spending cuts while maintaining or improving service levels and continuing to address drainage issues and invest in roads, water infrastructure, buildings and asset replacement. As a result, before adding new debt, the fiscal year 2018 budget includes a 1.8%, or $940,123, savings over fiscal year 2017 estimates. This was achieved despite required spending increases totaling $1.43 million resulting from:

  • a $285,000 increase in maintenance of effort support the City is required by the state to provide to Germantown Municipal School District,
  • a $250,000 increase in the City’s Other Post Employee Benefits liability and
  • an $890,000 increase in the City’s pension liability which fluctuates based on investment performance in the market.


Why $1.99?

With all these factors in play and in an effort to deliver a fiscally responsible budget, the proposed property tax adjustment breaks down as follows:

 Certified tax rate after roll back   $1.76
 Annual debt service for the new $27 million K-5 elementary school  $0.10
 Annual debt service for new school-related road/safety improvements  $0.03
 Amount to help offset average annual loss of the Hall income tax  $0.10
 Proposed new tax rate    $1.99

                   

How much more can the average homeowner expect to pay?
The impact this $0.23 proposed tax increase will have on the residents of Germantown can best be expressed by considering the median home value in the city. Based on a value of $309,300 the average homeowner would pay an additional $178 annually in taxes, or $15 per month.


How does the City allocate the $1.99 tax rate?
In fiscal year 2018, the $1.99 property tax rate is budgeted as follows:

 Public safety – fire and police  $0.72
 General government – HR, finance, development, etc.  $0.55
 General debt service payments  $0.17
 Transportation and environment – public works and animal shelter  $0.17
 Reserves – funds to sustain the five-year planning period  $0.17
 Other expenses – transfers to the Farm Park, Great Hall, ambulance  $0.11
 Community services – Parks, libraries, etc.  $0.10

                                                    

The public is invited to weigh in on the budget.
The first reading on the budget and tax rate is scheduled for Monday, May 22. The second reading and public hearing are scheduled for June 12, with the third and final reading on June 26. All begin at 6 p.m. in City Hall Council Chambers, 1930 S. Germantown Road.


Questions?

Residents with questions on any aspect of the budget, service levels or the property tax adjustment, may contact City Administrator Patrick Lawton at 757-7201 or PLawton@Germantown-TN.gov.

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