City, County Governments Spar Over Sales Tax Agreement

FAYETTEVILLE, Tenn.(WHNT)-A squabble over sales tax revenue is making waves in Lincoln County, Tennessee.

The city of Fayetteville confirms that it will end a sales tax sharing agreement it’s had with Lincoln County for several years in order to fund some capital improvement projects that include construction of a new police station and several street upgrades. Fayetteville has voluntarily split its one-and-a-half cent sales tax proceeds with Lincoln County, which most recently generated more than $600,000 for both entities.

Lincoln County Mayor Peggy Bevels told WHNT News 19 she was blindsided by the move, spurring her to write a letter to city officials that warned of “possible damage” if the agreement was allowed to hit its expiration date in June. Bevels said county funding for the area’s only animal shelter and senior center would likely be cut off, putting the survival of both non-profits in jeopardy.

“It was a shock,” said Bevels. “We don’t like it. We like to be able to help the community. We like to be stable enough to operate.”

Bevels said there was simply nowhere else she could cut from in the county’s annual $40 million budget.

“The commissioners have not been able to find that.”

But Fayetteville Alderwoman Gwen Shelton disputed Bevel’s assertions, noting that the sales tax agreement was always voluntary and not a legal obligation.

“This isn’t about us working against them, this is about us getting some money back that’s been ours,” said Shelton. “We’ve got a lot of projects in place. We’ve got a new police department we want to build. We have some sidewalks, some streets. Right now we just think it’s a good time to not renew a three-year contract…Their [Lincoln County] budget is larger than ours. Ours is $8.5 million, they’re right at $40 million. Mayor Bevels and the community knew that one day the city might take it back, and with a budget as large as theirs is, I would hope that $600,000 wouldn’t cripple their budget.”

The budget committees for both government bodies are scheduled to meet together next week to discuss the sales tax agreement. The Fayetteville Board of Aldermen voted not to renew the agreement earlier this year.