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Original Author: Hemsley, Sid
Date of Material: 01/12/1999

Taxes--Personal property
Tax rates--Municipal
Tax collection

Authority of City to Levy Whatever Tax Rate It Considers Necessary to Fund Municipal Purposes

Reviewed Date: 04/30/2021
MTAS was asked whether the city can levy a property tax above $1.75 when the city's charter limits the levy to that amount.

You have the following question: Can the city levy a property tax above $1.75 when the city’s charter limits the levy to that amount? Your letter indicates you are concerned that you cannot sign-off on school bond documents certifying that the city has the authority to issue bonds with an assumed tax rate of $2.69.

The answer is that the city has the authority to levy a property tax in excess of $1.75, and at whatever level is necessary to fund municipal purposes, which certainly includes school purposes.

Municipal authority in Tennessee to impose taxes for municipal purposes tax derives from Article II, Sections 28 and 29 of the Tennessee Constitution, and Tennessee Code Annotated, section 67-5-1-01. Tennessee Code Annotated, section 67-5-103(a), also reinforces that authority. Tennessee Code Annotated, section 67-5-103(b) then declares that:

All existing limitations and restrictions, whether restrictive as to total dollar amount or restrictive as to specific uses or a combination of the two (2), where imposed by general or private act, or home rule charter, upon the maximum rate or amount of any county, municipality or metropolitan government ad valorem tax levy, are hereby repealed effective January 1, 1973.

The proposition that the General Assembly has the authority to pass general legislation that affects all municipalities and that supercedes private acts on the same subject is so certain that it is not necessary to cite any authorities to support it.

Presumably, a municipality could by private act reimpose a tax rate limitation. However, that presumption need not be tested, because, as far as I can determine, the City has not by private act reimposed such a limitation. For that reason, the city has the authority to levy whatever tax rate it considers necessary to fund municipal purposes.