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Roane County Executive Ron Woody has expressed concerns that an increase in the county’s property tax rate could hurt its chances to recruit industry.
The rate is currently $2.18 per $100 valuation.
The rate could rise this year with the school system facing a budget shortfall.
At the same time, school and county officials are looking to beef up security at the schools.
“These two situations alone could require a potential tax increase approaching 25 percent if all other program support remains constant,” Woody wrote in a recent column.
Woody also pointed out that two of the county’s competitors for industry, Cumberland and Loudon, have substantially lower property tax rates.
“One portion of making a decision is tax rates,” Woody said. “Education is a component, infrastructure is a component and also law enforcement. The whole point is you got to be aware of who you’re competing with.”
Cumberland’s property tax rate is $1.49 per $100 valuation. The rate in Loudon is $1.78.
“A lot of people think if you just go out there and beg industry to come, they’ll come,” Woody said. “They’re not going to do that. They’re going to make a decision that’s in their best interest.”
“Your tax burden is a factor,” Woody added. “It may be a minor one in some cases. It may be a major one in some cases.”
The Roane Alliance is Roane County’s economic development organization.
President and CEO Leslie Henderson said it’s typical for industrial prospects to ask about the county’s tax rate.
“Just about every time we get a request for information, there’s a blank for that,” she said.
Henderson said she’s never known the county’s tax rate to be a deal breaker.
“Not since I’ve been around,” she said. “Then again, it might have affected some people’s decision, and I just don’t know it. They don’t always tell us why they decide to go somewhere else.”
Henderson said she doesn’t concede just because another county she’s competing with for an industry has a lower property tax rate than Roane.
“If I find out my competition has lower taxes or beats us on any category, I know I’ve got to come up with a way to level the playing field,” she said.
Henderson said one of the county’s biggest selling points is location.
“I think it’s especially true at Roane Regional,” she said. “In large part that’s why Volkswagen chose us.”
Roane County’s new fiscal year starts July 1. The budget process has already started.
Woody said a balance must be reached between the county services and the tax revenue to support the services. He also mentioned the Laffer curve theory, which holds if the tax rate gets too high, it will discourage economic growth.
“What Laffer says is somewhere along the spectrum, you will get to the point where your tax rate is so high it will have a negative effect on bringing in revenue because you then impede industrial growth and expansion along with residential growth and expansion,” Woody said.