The property tax rate increase included in the budget proposal—which would be the first rate hike since 2012—comes one month after Cooper’s State of Metro address on March 31, at which he announced that he would propose a “sharply” increased rate for the next fiscal year. According to Cooper, city officials anticipate losing hundreds of millions of dollars as economic activity declines in the wake of the coronavirus.
Overall, the proposed rate increase of $1.00 brings the total property tax rate to $4.155, according to Cooper's presentation. This is a 31.7% increase from the current rate of $3.155, according to city budget documents.
"Even with these actions, there is no way of not sharply increasing property taxes to replace more than $300 million in missing revenue," Cooper said. "This will be the greatest financial challenge that this city, or any other American city for that matter, has faced in our lifetime."
The Metro Finance Department estimates the city will see a $470 million loss in revenue over a 16-month time frame due to the March 3 tornado and financial challenges as a result of the coronavirus outbreak, according to the presentation.
The decline in revenue during the fourth quarter of the current fiscal year led city officials to cut expenditures, leaving Metro Nashville with only $12 million of fund balances at the end of FY 2019-20, Cooper said. In late March, the city implemented a hiring freeze, with the exception for public safety positions, as a way to cut spending.
“While this budget does not include the many new investments I had hoped to make in a full deployment of body cameras, affordable housing, transportation, social and emotional learning, and much more, this budget will provide needed financial stability to Metro Government,” Cooper said. “Nashville’s growth will return once again, our economy will flourish as it did before the storm, and we will not lose sight of the good work we’ve set out to do on behalf of all Nashvillians.”
The budget does not include a cost-of-living adjustment for city employees, Cooper said.
With Cooper’s proposed FY 2020-21 now submitted to Metro Council, council members will either approve the mayor’s budget proposal or approve a substitute budget with or without a property tax increase by the end of June, according to the budget schedule released in late April by the Budget and Finance Committee.
The committee will hold five days of budget hearings beginning May 11, during which departments will have the chance to discuss their requests with council members. Metro Council will then host a public hearing on the budget on June 2 when it is up for consideration on the second of three readings, although it is not yet clear if the meeting will be held virtually or in person.
At-large council member and Budget and Finance Chairperson Bob Mendes will submit the committee's substitute operating budget on May 27, according to the schedule.
Metro Council narrowly avoided an increase in both of the last two budget cycles, leaving Davidson County’s property tax rate the lowest among the state’s four metropolitan areas. At his State of Metro address, Cooper said he was committed to keeping the proposed tax rate lower than the rates of peer cities such as Chattanooga and Memphis, which are at $5.042 and $8.160, respectively.
Cooper’s budget presentation will be immediately followed by comments from members of the Metro Finance staff, including Kevin Crumbo, Kristin Wilson, Kim McDoniel, Mary Jo Wiggins and Tom Eddleman, according to an earlier memo from the Mayor’s Office. The presentation will end with a Q&A session with council members.
This story is developing, check back for updates.