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VOL. 43 | NO. 19 | Friday, May 10, 2019

Nashville, it’s time for a property tax increase

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Normally the only blue ribbon that gets my attention is the one on a can from the good folks at the Pabst Brewing Co. in Milwaukee, Wisconsin.

But the recent report from the Metro Blue Ribbon Commission suggesting ways to “save” $20 million a year for the Nashville budget did catch my eye, for a couple of reasons.

One, a goodly number of the recommendations aren’t savings at all, but revenue increases, such as fees for parking at Metro parks and admission to the new year’s eve celebration.

Two, $20 million – while it would be handy to have in my bank account – is basically pocket change in relation to Mayor David Briley’s proposed $2.33 billion budget for Fiscal Year 2020. For every $100 spent, the commission’s suggestions would account for a whopping 87 cents.

The report also was a reminder of a question that has been on my mind ever since returning to Nashville last year:

How is it that such a famously booming “It City” – with new residents pouring in, visitors multiplying like fruit flies on a watermelon and housing values reaching and surpassing the gouging stage – can be finding it hard to make ends meet?

An effort to reconcile those seemingly contradictory situations sent me venturing into the depths of Metro budgets for the past 20 years. Here is my advice, based on that effort:

Do not venture into the depths of Metro budgets for the past 20 years.

The exercise is mind-numbingly dull. An example of the prose: “A ‘fund’ is an accounting entity with assets, liabilities, equities, revenues, and expenditures, held separate in the budget for certain specific activities or to accomplish definite objectives.” As your eyes glaze over and your attention wanders, you will begin to appreciate why you did not choose accounting as a career option.

But having taken the plunge myself, I can report the following findings: Property and sales tax receipts, the primary revenue sources for government, have increased a bunch. As have budget totals.

I could be more precise and quote lots of figures. (Sales tax collections up 84 percent!) But I fear for the cerebral damage that might occur when your head bangs down on the table in front of you.

Mendes

What I’ll do instead is introduce Councilman-at-Large Bob Mendes, one of the voices behind a proposal to raise the Metro property tax rate by 50 cents.

Mendes started making his case for what he calls a “rate correction” about a year ago during the previous budget season, in a series of blog posts. He spoke of “dangerous underfunding” with a budget “built on quicksand” and projected a shortfall of $150 million for the years through Fiscal 2021.

He lamented the city’s reneging on employee raises, shortchanging public schools and short-term fixes like selling off “surplus” Metro property.

“Every penny of property tax equates to approximately $3 million of revenue for Metro,” he wrote. Hence the proposal for a 50-cent hike.

The biggest reason for the shortfall, he said, was the city’s failure to match the property tax rate with spending needs after the 2017 reassessment. Instead, because reassessments themselves can’t change the amount of money coming in, the tax rates were adjusted down to “an all-time historic low.”

I’ve exchanged some emails with Mendes recently, and he points out some other factors that crimp the budget. Principal and interest rates for general obligation bonds almost doubled from 2005 to 2019, up to about $267 million.

Some of the increased bond debt is because of a restructuring done a decade ago to help the city during the recession, Mendes said. Some is because of costs for infrastructure repairs after the 2010 flood.

And, “Some of it is due to the fact that growth isn’t free.”

Mendes pooh-poohs the popular notion that corporate tax incentives are to blame: undoing every one (which can’t be done) would generate only $23 million, he said. As for the notion that homeowners would be squeezed: Businesses pay 62 percent of the property tax load.

One more bit of learning from my dive into Metro budgets: They often have a chart comparing Nashville tax rates with city/county rates in other Tennessee cities, and we’re almost always lagging. The proposed budget for 2020 shows our rates lower than those of Knoxville, Memphis, Chattanooga and Franklin.

And a comparison, based on personal experience: The house I expect to buy here will cost roughly what my house in New York sold for. And yet the property taxes here will be about one-fourth what we paid there.

OK. I have my answer. Nashville is struggling while Nashville is booming because Nashville tries to get by on the cheap.

And you get what you pay for.

Joe Rogers is a former writer for The Tennessean and editor for The New York Times. He is retired and living in Nashville. He can be reached at jrogink@gmail.com.

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TNLedger.com Knoxville Editon
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0