April 15, 2003
Dear City Attorney:
Tennessee Attorney General’s Opinion 03-019 opines that a home rule municipality can
amend its charter to provide for a referendum on property tax increases. That opinion appears to
be sound. The solution for home rule (and other) municipalities is probably a legislative one.
My analysis of TAG 03-019 is broken down into three categories:
1. Article XI, ' 9 of the Tennessee Constitution and appropriate general tax statutes;
2 Tax rate limitation referenda under Tennessee Code Annotated, ' 6-53-105(b);
3. Automatic tax limitation referendum provision in home rule charters.
Article XI, ' 9 of the Tennessee Constitution and Appropriate General Tax Statutes
With respect to the peculiar powers of home rule municipalities, TAG 03-019 accurately
points to Article XI, ' 9 of the Tennessee Constitution, which is the source of what is commonly
called the “home rule amendment.” The pertinent part of the home rule amendments provides
that:
Any municipality after adopting home rule may continue to operate
under its existing charter, or amend the same, or adopt and
thereafter amend a new charter to provide for its governmental and
proprietary powers, duties and function....provided that no charter
provision except with respect to compensation of municipal
personnel shall be effective if inconsistent with a general act of the
General Assembly....
Two important things can be gleaned from that provision relative to the right of a home
rule municipality to amend its charter to provide for a referendum on raising property taxes:
First, the home rule municipality can amend its charter to “provide for its governmental
and propriety powers, duties and functions....” There can be few powers more governmental than
the power of taxation. That power is an attribute of the sovereignty of the state, and the power of
a local government to tax is a delegation of the state’s power to the local government. [Kuntz v.
Davidson County, 74 Tenn. 65 (1878); Knoxville & O.R.R. v. Harris, 43 S.W. 115 (1897); Hill
v. Roberts, 217 S.W. 826 (1919); Arnold v. Mayor of Knoxville, 90 S.W. 469 (1905).]
April 15, 2003
Page 2
You made the argument in Legal Department Memorandum 03-17 that because the City
adopted the general law Modified City Manager-Council charter contained in Tennessee Code
Annotated, ' 6-30-101 et seq., and that because under that general law charter, the tax rate is
required to be set by the city council [Tennessee Code Annotated, ' 6-34-203], the referendum
procedure at issue in TAG 03-019 is not applicable. That conclusion will not stand up to a
reading of the above quoted provision of the home rule amendment in Article XI, ' 9 of the
Tennessee Constitution, or to the history of the adoption of that amendment. It declares that a
municipality that has adopted home rule can continue to operate under its existing charter, “or
amend the same, or adopt and thereafter amend a new charter to provide for its governmental and
proprietary powers....” The phrase “to provide for its governmental and proprietary powers”
undoubtedly refers back to both situations contemplated in that provision: where the home rule
municipality continues to operate under its existing charter, and where the home rule
municipality has adopted a new charter. Given the history and purpose of the home rule
amendment, it is illogical to interpret it to mean that if a home rule city operated under an
existing charter which provides that taxes are levied by the city council then the city is foreclosed
from adopting an amendment to its home rule charter that would authorize a referendum on the
city council’s decision on that point.
Comments about the meaning of the home rule amendment made by two delegates to the
Limited Constitutional Convention of 1953 also point to the broad meaning of the above
language.
Mr. McGinness speaking unkindly of the home rule amendment, declared that:
Now, a municipality has, as I have stated, only such powers as are
expressly delegated to it; then, if this resolution [which became the
home rule amendment] be embodied in our Constitution, it would
have all power except insofar as it might be restrained by general
law. This is not academic; it is fundamental. In my view, it is a
dangerous innovation. [Journal of Proceedings of the Limited
Constitutional Convention of 1953, p. 959]
Mr. Sims, speaking more kindly of the home rule amendment, declared:
In other words, if it be the City of Nashville, or Knoxville, or
Clarksville, then after the people have determined that they want to
operate under home rule, it would continue under the same charter
that you now have, or you can amend that charter, or you can adopt
April 15, 2003
Page 3
an entirely new charter regulating the internal structure of your
municipal government....That means that even if you elect to
operate at your option under the home rule plan, and you elected to
amend your charter, you cannot adopt an amendment that is
inconsistent with the general law, with only one protection to the
city and that is that the home rule city will have the exclusive right
of regulating the pay of its employees.....After you get under the
optional plan [home rule], you do not acquire any powers except
those which are not contrary to the general acts or any future
general acts of the legislature. [Journal...., p. 1011-12]
Whether for or against the home rule amendment, both Mr. McGinness and Mr. Sims
understood that home rule municipalities would have board power to amend their charters as
long as the amendment did not conflict with general law. It is difficult to believe that they felt
any differently about the right of a municipality that had adopted home rule and continued to
operate under a general law charter, as did your City.
Second, except with respect to compensation, a home rule charter provision cannot be
“inconsistent with an act of the General Assembly.” That provision of Article XI, ' 9 makes it
clear if the General Assembly has provided by general law that the governing body of
municipalities have the authority to set the tax rate, no home rule charter amendment can be
inconsistent with that act. TAG 03-019 points out that the general statute authorizing the tax rate
to be set in counties deposits that authority in the county governing body [“The amount of such
tax shall be fixed by the county legislative body of each county.” Tennessee Code Annotated, '
67-5-102(a)(2)], but that the same thing is not true with respect to the general statute authorizing
the tax rate in municipalities [“Taxes on property for municipal purposes....shall be collected by
the same officers at the time and in the manner prescribed for the collection of the state revenues,
except as herein provided.” Tennessee Code Annotated, ' 67-5-103].
TAG 03-019 observes in Footnote 1 on page 3 that the state law that applies to tax levies
in excess of the certified tax rate [Tennessee Code Annotated, title 67, chapter 5, part 17] would
apply to home rule municipalities. Tennessee Code Annotated, ' 67-5-1702, expressly provides
that:
No tax rate in excess of the certified tax rate as provided for in '
67-5-1701 shall be levied by the governing body of any county or
of any municipality until a resolution or ordinance has been
approved by the governing body according to the following
procedure:
(1) The governing body shall advertise its intent to exceed the
April 15, 2003
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certified tax rate....
(2) The governing body, after public hearing, may adopt a
resolution or ordinance levying a tax rate in excess of the certified
tax rate.
An argument could be made that the above statute implies that the tax rate in
municipalities is set by the municipal governing body. But that argument is probably a weak
one. TAG 03-019 dismisses that statute by speaking of the need of a home rule municipality to
mesh the procedures it contains with any automatic referendum provision, tax payment deadlines,
etc. Indeed, that dismissal appears appropriate as to any home rule charter amendment providing
for a referendum on any tax increase adopted by the municipal governing body whether the
increase were under or over the certified tax rate.
Tax Rate Limitation Referenda Under Tennessee Code Annotated, ' 6-53-105(b)
The purpose of Tennessee Code Annotated, ' 6-53-105(b) is probably related to the
elimination of existing limitations and restrictions on tax rates, whether imposed by general or
private acts or home rule charter, as of January 1, 1973, by Tennessee Code Annotated, ' 67-5102. The former statute is the product of Public Acts 1973, Chapter 225, while the latter statute
is the product of Public Acts 1973, Chapter 226. Standing by itself, Public Acts 1973, Chapter
226 appears ambiguous on the question of whether any municipality has the right to resurrect
such limitations and restrictions by a charter amendment after January 1, 1993. I am guessing,
but I suspect accurately, that the purpose of Public Acts 1973, Chapter 225 was to remove that
ambiguity with respect to home rule municipalities.
Whatever the case there, TAG 03-019 appears to correctly reason that Tennessee Code
Annotated, ' 6-53-105(b), authorizes home rule municipalities by referendum to insert a
provision in their charters limiting the tax rate. There are two possible thing wrong with this
statute:
1. If it was the purpose of Tennessee Code Annotated, ' 67-5-102 [Public Acts 1973,
Chapter 226] to prohibit all municipalities for inserting tax rate limitations and restrictions in
their charter, Tennessee Code Annotated, ' 6-53-105(b) [Public Acts 1973, Chapter 225] might
be in conflict with that statute.
2. Although the General Assembly has the right under Article XI, ' 9, to pass general
legislation applying to home rule municipalities, an argument can be made that Tennessee Code
Annotated, ' 6-53-105(b) violates Article XI, ' 8, of the Tennessee Constitution which provides
that, “The Legislature shall have no power to suspend any general law for the benefit of any
particular individual, nor to pass any law for the benefit of individual inconsistent with the
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general laws of the land.” Article XI, ' 8, has been held repeatedly to apply to legislation that
affects local governments, but the courts have also carved out an exception where there is a
“reasonable basis” for legislation that would not otherwise qualify as a “general law” under that
provision. [See City of Tullahoma v. Bedford County, 938 S.W.2d 408 (Tenn. 1977); Stalcup v.
City of Gatlinburg, 577 S.W.2d 439 (Tenn. 1978); White v. Davidson County, 360 S.W.2d 15
(1962); City of Chattanooga v. Harris, 442 S.W.2d 602 (1969), and literally dozens of other cases
in this area.] In other words, Tennessee Code Annotated, ' 6-53-105(b) might qualify as general
legislation in the sense that it applies to all home rule municipalities, but fail as general
legislation under Article XI, ' 1 of the Tennessee Constitution because there might be no
“reasonable basis” for treating home rule municipalities differently than all other municipalities
with respect to their right to reestablish tax rate limitations in their charters.
It should also be pointed out that Tennessee Code Annotated, ' 6-53-105(b) provides for
a special election on the part of a municipality wishing to take advantage of it. However, Article
XI, ' 9 of the Tennessee Constitution clearly requires home rule amendments to be submitted to
the public in the “first general state election” following the 60 day publication notice required
therein.
I will not go further in the analysis of Tennessee Code Annotated, 6-53-105(b), because I
understand that the principal question in TAG 03-019 is not whether the city’s home rule charter
can be amended by the insertion of a tax rate limitation under that statute, but whether the city
can amend its home rule charter to provide for an automatic referendum provision under which
the voting public can challenge an increase in the tax rate set by the city council.
Right of Home Rule City to Insert Automatic Referendum Provision in Its Charter
Under Article XI, ' 9 of the Tennessee Constitution, there are three ways an amendment
to a home rule charter can be proposed:
1. By ordinance;
2. By a charter commission provided for by an act of the General Assembly and elected
by the voters;
3. By a charter commission of seven (7) members chosen at large not more than once
every two years, in a municipal election following a petition signed by not less than 10% of the
voters voting in the most recent general municipal election.
Apparently, the charter commission under option 3 is the route to a proposed charter
change of the kind at issue.
April 15, 2003
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TAG 03-019 opines that because a home rule charter amendment providing for an
automatic referendum on tax increases adopted by the city council would not be inconsistent with
any general law on that subject, such an amendment is legal under Article XI, ' 9 of the
Tennessee Constitution. I have searched in vain for any express or implied statutory or case law
to the contrary. As I pointed out above in the section titled Article XI, ' 9 of the Tennessee
Constitution and Appropriate Tax Statutes, taxation is a governmental power that can be
adjusted by home rule municipalities, provided the adjustment does not conflict with any general
law governing taxation. Because there is no general tax statute that deposits a municipality’s
authority to set the tax rate with the municipal governing body, a home rule municipal charter
can provide that the tax rate set by the municipal governing body is subject to a referendum.
Sincerely,
Sidney D. Hemsley
Senior Law Consultant
SDH/