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Collierville Board struggles with loss of revenue in effort to balance town’s budget

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With trends in the national and local economy steadily inching positive one might wonder how and why the town could be losing revenue. In fact, when it comes to economic vitality Collierville has quite a bit to feel good about.

Collierville is the proud owner of one of the most stimulated housing markets in the in the Mid-South region. In 2017, over 1,000 homes were sold in Collierville which out paces the 2016 figure of just over 900.

Collierville compares very favorably county wide over five calendar years in terms of median sales price which is increasing about seven percent annually. Home buyers and real estate agents see Collierville as a good investment and so do home builders. New residential building permits continue to experience positive momentum steadily increasing over four consecutive years.

A result of the robust home building and real estate market is the spike in the total invested in residential construction in 2017 of $86 million, compared to 75 million in 2016.

In addition to all the residential growth, Collierville has staked out a position as one of the most prestigious locations for corporate headquarters in the Mid-South to locate or expand. The outcome for the local economy due to these corporations locating in Collierville is an upswing in commercial investment. For example, the total investment in commercial construction in 2017 was $130 million compared to $41 million in 2016.

Combined with residential investment, homebuilding and commercial investment there are additional positive factors such as a continual stream of new residents moving to Collierville, new restaurants and retail shops opening and increased occupancy of office space.

So why is the town losing revenue? Basically there are two sources of revenue where the Town is experiencing either a loss or decline in revenue. The loss in revenue is related to the Tennessee Hall Income Tax. The State of Tennessee is eliminating this tax on earned income from investments which equates to about $1.5 million dollars annually as revenue for the town’s budget.

The source of revenue decline is from local option sales tax. Revenue from local option sales tax has been trending flat and recently declining. Much of the decline in Town sales tax revenue can be attributed to online shopping. Although online shopping is something that is very convenient, in the end it hurts the local retailers and has a negative impact on Town sales tax revenue.

These two losses in revenue cause the Board of Mayor and Aldermen to begin the 2018-19 budget process looking for ways to make up $2 million dollars in revenue.

“In January we started our budget work sessions for the FY 2018-19 budget and these losses in revenue create some significant challenges to balancing the budget,” said Mayor Stan Joyner. “As we continue to work through this process the Board and staff will work together and examine every available option to make up this loss in revenue in an effort to avoid a property tax increase, which if needed in the future will be an absolute last resort.”

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