• Concerned Citizens of Lakeland TN

Debt Limits NOW!

Municipal Debt Limits
Concerned about the continually increasing property taxes here in Lakeland? You should be. By Tennessee law, we are not allowed to vote on property tax increases.

The type of debt the Board of Commissioners must use to finance their school plans, General Obligation Debt, is paid for via property taxes. Whatever amount of G.O. Debt they issue is married to our property taxes, for better or worse.

The results of the bond referendum show that the majority wants a different plan than “Borrow Now - Build Now”, but based on many statements made by our Commissioners they seem intent on pursuing this plan in spite of the results of the vote.

How can we protect Lakeland taxpayers from massive debt and the resultant tax increases that would be required to pay for it? By implementing limits on the amount of General Obligation debt Lakeland can issue. Every city in Shelby County, except Lakeland, has Debt Policies has that place restrictions on the amount on General Obligation Debt they can have. Adding sensible limits to our current Debt Policy will control the amount of debt our BOC can incur and protect us from the requirement for further property tax increases.

The debt limits of the surrounding cities in Shelby County are listed in the table below.

City

Debt Policy Limits

Arlington

G.O. Debt Service ≤ 15%** Total Property Tax Revenues

Millington

Total G.O. Debt/Total Assessed Property Value ≤ 4.5%

Debt Per Capita ≤ $800

Percentage of Principal Paid within 10 years ≥ 55%

Germantown

Total G.O. Debt/Total Assessed Property Value ≤ 4%

Debt Per Capita ≤ $1,500

G.O. Debt Service/General Fund Expenditures ≤ 12%

Per Capita Debt/Per Capita Income ≤ 3%

Collierville

Per Capita Debt/Per Capita Assessed Value ≤ 4%

Per Capita Debt/Per Capita Income ≤ 4%

Percentage of Principal Paid within 10 years ≥ 60%

General Fund Balance Requirement of 25% minimum

G.O. Debt Service/General Fund Expenditures ≤ 12%

Average Life of Total Debt ≤ 10 years

Bartlett

Total G.O. Debt/Total Assessed Property Value ≤ 5%

Debt Per Capita ≤ $2,000

G.O. Debt Service/General Fund Expenditures ≤ 15%

Lakeland

No Debt Limit Rules.

** Can be increased to 20% for emergencies by 2/3 vote of Town Council


After examining the debt limits used in each surrounding city, we selected three to add to our Lakeland Debt Policy. We selected these because they use ratios that compare General Obligation Debt to population, assessed property values and General Fund Expenditures. Using ratios instead of fixed values allows for more debt as the City grows, but also protects us if the City doesn’t grow.

             Debt Per Capita:              Range - $800 (Millington) to $2,000 (Bartlett)
                                                         Lakeland Proposal - $1,500

            Debt/Assessed Value:       Range - 4% (Collierville) to 5% (Bartlett)
                                                         Lakeland Proposal - 4.5%

            Debt/Expenditures:         Range - 12% (Collierville) to 15% (Bartlett)
                                                        Lakeland Proposal - 15%

These values chosen are either in the middle of the range or, in the case of Debt/Expenditures, the most lax of the limits used by our neighboring cities. We do not want to stifle growth and understand borrowing for large projects will be required.  What we do want are sensible limits on the amount of that borrowing just like every other city around us already has.  

The following table shows what we feel needs to be added immediately to the Lakeland Debt Policy and what each limit would allow based on the City as it is today.

City

Debt Limit Policy Proposal

Maximum Bond Allowed

Lakeland

Total G.O. Debt/Total Assessed Property Value ≤ 4.5%

Debt Per Capita ≤ $1,500

G.O. Debt Service/General Fund Expenditures ≤ 15%

$7,432,181

$12,443,751

$7,200,000

 

Limiting value is whichever is smallest. Highlighted in yellow.


Based on the current financial situation of the City, the sensible debt limits proposed and the amount of General Obligation debt we already have, the most we could borrow is just $7.2 million. This highlights WHY it’s so very important we have actual limits on debt in our debt policy!

Here are the email addresses of the BOC members from the City of Lakeland website.  Please join us in petitioning them to implement these sensible debt limits immediately.

Wyatt Bunker - This email address is being protected from spambots. You need JavaScript enabled to view it.
Sherri Gallick - This email address is being protected from spambots. You need JavaScript enabled to view it.
Clark Plunk - This email address is being protected from spambots. You need JavaScript enabled to view it.
Gene Torrey - This email address is being protected from spambots. You need JavaScript enabled to view it.
Randy Nicholson - This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

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