Q&A: Budget Wrap-Up

From what budgets did Councilmembers get to choose?

Four budgets were proposed, and they came from across the political spectrum.

  • The O’Connell budget proposed a $23/month tax increase and relied on borrowing and modest cuts. It was withdrawn by the sponsor after it was deemed unacceptable by the State of Tennessee.
  • The Glover budget proposed a $58/month tax increase and also made deep cuts to city services. It did not meet the cash reserves requirement dictated by the State of Tennessee.
  • The Cooper budget proposed a $63/month tax increase and served as the baseline budget.
  • The Mendes budget proposed a $65/month tax increase, shifted some funding, and added dollars for schools.

These amounts are based on a $300,000 home with three vehicles. See a full side-by-side comparison here.

Was voting against a tax increase an option? Why or why not?

No. Under Metro’s Charter, the Council must pass its budget ordinance or the mayor’s budget goes into effect. Each budget proposal was based on a significant tax increase, including Mayor Cooper’s, and voting “no” on any alternative budget proposal was the equivalent of voting “yes” for the Cooper budget. As a result, by the end of the night when only the Cooper and Mendes budgets remained active, each of our 40 Councilmembers voted “yes” to either the Cooper budget or the Mendes budget. That is, a “no” vote for the Mendes budget was a “yes” vote for the Cooper budget. (Metro Charter Section 6.06)

How did you vote? Why?

We had two separate votes – an up or down vote on the Glover budget and an either/or vote on the Cooper and Mendes budgets.

I voted no on the Glover budget because 1) out of 2,176 survey responses, it was the third favorite budget; 2) out of nearly 1,000 phone calls or emails, fewer than a dozen asked me to support it; and 3) versus the other budgets, it cut services without meaningfully reducing taxes, instead giving the savings to larger businesses.

I chose the Mendes budget over the Cooper budget because 1) out of 2,176 survey responses, it was the favorite budget; 2) out of the nearly 1,000 phone calls or emails, more asked me to support the Mendes budget than any other budget; and 3) versus the Cooper budget, it met the priorities communicated to me.

See a play-by-play here.

Wasn’t there a more politically popular way to vote?

I was the last person to vote (the roll was called in order of district number), so the outcome was already decided: the Mendes budget, signified by “yes” votes, had 31 votes and the Cooper budget, signified by “no” votes, had 8 votes.

I was aware that voting for the Cooper budget would allow me to mislead my constituents and claim that I voted “no” on a tax increase, but I will not deceive or ignore the preferences that were expressed to me.

Why didn’t you delay the vote for a week as some suggested?

I was prepared to support a motion to defer, but there was no support among the Council for it so no such motion was made. A motion to defer wouldn’t have solved our issues and would’ve left the Council unable to override a potential mayoral veto, but 50 percent of the constituents who expressed an opinion supported deferral and I was willing to err on the side of delay.

Can the budget or tax rate be “recalled” or overruled in some way?

No. Under the Metro Charter, there is no mechanism for such action, and the budget takes effect July 1. If sales tax revenues exceed expectations due to a more robust than expected economic recovery, however, the Council will have the opportunity to lower the tax rate in the next month or so.

Is this the highest tax rate we’ve ever had?

No, it’s been higher 13 of the last 20 years. Here are rates in the general services district (GSD), which includes Bellevue:

2021
$3.788
2018-2020
$2.755
2014-2017
$3.924
2013
$4.04
2010-2012
$3.56
2006-2009
$4.04
2002-2005
$3.84

How does our property tax compare to other cities?

Nashville lands in the mid-40s for total tax burden when ranking the largest city in each of the 50 states. As for Tennessee cities, here are some rates:

Franklin
$3.2270
Murfreesboro
$3.5090
Nashville GSD
$3.7880
Cookeville
$3.9160
Clarksville
$4.0200
Knoxville
$4.5840
Chattanooga
$5.0420
Memphis
$7.2460

What tax relief options are available?

  • Property Tax Freeze Program. This program allows qualifying homeowners to continue paying the same total tax they are currently paying. Homeowners age 65 or older with a 2018 household income below $42,620 are eligible. (This amount is set by the state.) The deadline to apply is July 1. Learn more here.
  • Property Tax Relief Program. This program provides qualifying homeowners with a voucher to cover a portion of their tax due. It is available to certain homeowners age 65 or older, disabled homeowners, disabled veterans, and widow(er)s of disabled veterans who meet other qualifications. The deadline to apply is July 1. Learn more here.
  • Property Tax Deferral Program. This program allows qualifying homeowners to defer payment on their taxes until they die or sell their property. It is available to homeowners age 65 or older or disabled homeowners with a 2018 household income below $29,860. The deadline to apply is December 31. Learn more here.

Did we cut spending?

Between spending cuts, negotiated savings, and other management actions, this budget cut $234 million.

What other options did we look at?

  • State law prohibits charging impact fees to developers, shifting more of the property tax burden to businesses, legalizing cannabis, or charging a commuter fee.
  • State law directs most downtown money to the Music City Center instead of our general fund.
  • With sales tax revenue down and an uncertain future, we couldn’t depend on increasing the sales tax rate to the level it is in most counties (one-half cent higher, the maximum allowed).
  • The state would not let us take part in any of the federal short-term loan programs that have been created during the COVID-19 crisis for this purpose.
  • The city is not putting any money into the approved soccer stadium.

Nashville has been booming! What’s the deal?

There are a lot of factors at play, and there’s plenty of blame to go around:

  • Tourist money doesn’t bring money to our general fund. Under state law, most downtown money is directed to the Music City Center.
  • New homes don’t just mean more tax revenue, they mean more expenses. With a footprint larger than most cities – bigger than Atlanta, Denver, Boston, and Salt Lake City combined – as development continues to expand through the county we face growing costs for infrastructure, public safety coverage, education, and more.
  • The state continues to reduce its share of education funding. With the state paying a smaller and smaller share of cost for public schools, Nashville is forced to pick up the slack.
  • Commercial property owners appealed their 2017 reappraisals in record numbers. With property values going up so much in 2017, big property owners lawyered up and caused our state-mandated reappraisals to result in many millions in reduced annual revenue.
  • Nashville debt costs grew due to Great Recession debt restructuring. During the 2007-08 economic crisis, the city refinanced the bond debt the city carries. Those called for ballooning payments ten years down the line, and we’ve seen our debt service increase as a result.
  • Nashville spent down its savings rather than adjusting its record low tax rate. As expenses grew due to increased services and labor costs over the previous several years, Nashville maintained a tax rate that was the lowest it’s been in the history of Metro Nashville without adjusting spending to match.
  • The Metro Council doesn’t have its own finance staff and must rely on the word of the Mayor and Director of Finance. Previous administrations weren’t straight with the Council or the city, and because the Council has only a bare bones staff, it wasn’t until we heard from the state comptroller that we had a full picture of our financial position.

How is the money allocated?

These are the approximate allocations from Nashville’s operating budget:

  • 40% education
  • 20% public safety
  • 15% debt service (schools and general)
  • 10% general government
  • 5% infrastructure and transportation
  • 4% recreation and culture
  • 4% health and social services
  • 2% other

Where can I read the budget?

The Mayor’s proposed budget is here. The adopted budget isn’t on the website yet.