VOL. 42 | NO. 22 | Friday, June 01, 2018
Council looks to ‘historic norm’ tax hike to fix problem
By Sam Stockard
Momentum is building behind Metro Councilman Bob Mendes’ push for a 50-cent property tax increase – which would not require voter approval – to stem an unexpected budget shortfall.
Mendes, an at-large council member, started the initiative with two co-sponsors, Sharon Hurt and Bill Pridemore, and is being joined by two more, Anthony Davis and Doug Pardue, who plan to sign on to the measure.
“There are several things that everybody needs to realize,” Mendes says. “First of all, never, ever, ever in the history of Metro have we gone from one property value reassessment to the next without having an upward adjustment on the tax rate. So, we would be acting completely uniquely in the history of Metro if it doesn’t happen this year, next year or the year after that.”
Secondly, he adds, Metro is seeing the effect of not adjusting the rate in 2017, with property tax revenue coming in lower than expected, largely because of thousands of successful commercial property appraisal appeals.
Metro’s Finance Department is projecting a $34 million revenue shortfall, $26 million from property taxes and $8 million from cuts in state and federal funds for education. In addition, the council tapped its rainy-day fund for $20.6 million this year, leaving it with a fund balance of less than 5 percent.
The idea of not funding schools adequately, repealing a pay plan on cost-of-living increases for Metro employees, in addition to propping up the budget by selling property and trying to build parking revenue are clear signs of the bad budget situation, Mendes says.
“We definitely need to look at expenses, but there’s a problem on the revenue side,” Mendes continues. “And we can ignore it and have it get worse on the backs of employees and teachers and school kids, or we can fix it.”
Mendes points out established parts of Nashville such as the Hillsboro/West End area saw tax decreases because their property values didn’t increase 37 percent, the countywide average. Likewise for the Hermitage area.
Adjusting the certified rate upward is “the historic norm” for Metro government, according to Mendes. Following the 2017 reappraisal, the property tax rate fell to $3.15 per $100 of assessed value in the urban area from $4.516. The property tax rate in the general services area increased 49 cents to $3.245 from $2.755.
The proposal would bring in an estimated $150 million more in revenue, costing the owner of a $250,000 home anywhere from about $320 to $400 a year, depending on whether they live in the general or urban services area.
Mayor David Briley, who won re-election May 24 against a wide array of challengers, acknowledges Metro enjoyed “historic revenue collections” in recent years following growth and prosperity.
“While the fundamentals of the city are very strong, we do have an estimated $34 million revenue shortfall in the current fiscal year, due to, among other things, reduced property tax revenues following the reappraisal,” Briley says.
Yet he is proposing a status quo budget without a property tax increase and only $5 million in increased funding for Metro Nashville Public Schools.
Metro teachers crowded a recent budget hearing as council members and school officials discussed an $884.2 million budget plan, which makes up a large part of the mayor’s $2.2 billion spending plan. No pay raises are planned for teachers, and their insurance premiums could go up, too.
The school district also plans to cut $385,000 on reimbursements to students for fees they must pay to take the ACT and International Baccalaureate exam and other tests.
“Since the budget was first announced, our members have been asking why there aren’t resources to fund our schools, support development of affordable housing and provide promised pay raises to Metro and MNPS employees,” says Brad Rayson, president of Services Employees International Union Local 2015, which includes teachers.
“They wonder how this can be happening with all the growth and prosperity around us. What has become painfully clear is that past decisions have caused a serious revenue shortfall. There is no good reason for it, and it can’t be fixed by simply reshuffling money or cutting other needed programs.”
The union supports Metro Nashville Council members “boldly pursuing” the plan to raise the property tax, which should have been done previously, and encourages the rest of the council to join.
The district’s budget does not touch individual school budgets, but it does cut 111.5 positions, including 30 at the central office, and affects the Reading Recovery program while pausing the STEAM initiative on science, technology and math.
“Right now, we have the opportunity to rewrite a chapter in our citizens’ history,” Metro Nashville Public Schools Director Shawn Joseph says.
A 1 percent increase for teacher pay combined with step raises would cost a total of $13 million alone. The Metro Nashville School Board’s priority is to increase teacher pay and reimburse students for testing costs if funding is available, Joseph adds.
In response to education needs, Davis says the council will have to make “bold” financial decisions.
“Someone has to have the guts to raise the funds with a rate correction,” Davis says, adding, “that’s on our shoulders.”
Besides running into opposition from the mayor’s office, Davis, Mendes and others sponsoring a tax increase will get pushback from Councilman Steve Glover.
“I know there are some people floating around raising taxes. I won’t support that,” Glover says, claiming existing funds can be redirected to accomplish the council’s goals.
Glover disagreed with promising a 3 percent cost-of-living increase for coming years but was outnumbered but adds he believes the council needs to do what it can to stand by that commitment.
“To me, I’m gonna do everything in my power to honor my word,” he says.
Metro Nashville Councilman Tanaka Vercher, who chairs the finance committee, acknowledges the council will look at every option because the situation could grow worse.
“We’re going to have these challenges for the next two years,” she says.