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Law360 (June 17, 2020, 3:15 PM EDT) -- Property taxes in the metropolitan Nashville, Tennessee, area will rise 34% as part of a budget the local government passed Wednesday to address the effects of the novel coronavirus pandemic.
The Metropolitan Council of Nashville and Davidson County passed a substitute proposal by Council Member Bob Mendes that will raise the property tax rate by $1.066 per $100 of assessed value. The current rate is $3.155 per $100 of assessed value, according to a city presentation.
The $1.066 raise is slightly larger than that proposed by Democratic Mayor John Cooper in his April budget proposal, which would have raised the property tax rate by $1 per $100 of assessed value.
A tax rate increase was necessary even before the pandemic, Mendes told Law360.
"Nashville came into these hard financial times, with a worst-in-America rainy-day fund among the 25 largest cities in America," Mendes said. "While the city has been booming, the city government has squeezed constituents on services and employees on pay for too long."
The city is facing a projected revenue loss of $216 million for the 2021 fiscal year, Cooper said in an April presentation.
The local government is the Metropolitan Government of Nashville and Davidson County, a consolidated city-county government. The city's 2021 fiscal year begins July 1, and the Metro Council had to pass a substitute budget by June 30, or the mayor's budget would have gone into effect.
Cooper praised the budget in a message posted online, saying that it provides a "stable financial footing for our city's future."
"The large tax increase is something I would not have considered were we not facing Nashville's greatest financial challenge," Cooper posted.
The mayor's administration previously said it has already taken action to save about $234 million through reductions, savings and deferred spending.
States and localities across the country are facing steep revenue declines as the pandemic continues. Credit ratings agency Moody's said this week that states could lose up to $160 billion in tax revenue in 2020 and 2021 because of the pandemic, and recoveries could depend on state tax structures and the willingness to increase taxes.
In April the U.S. Conference of Mayors and the National League of Cities released a survey of localities that found that the pandemic has caused a precipitous drop in revenue for nearly every American city. The survey, which received answers from 2,463 cities, towns and villages, found that 88% of cities expected a revenue shortage because of the pandemic.
Cooper did not respond to requests for additional comment.
--Additional reporting by James Nani. Editing by Neil Cohen.
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