By Clint Confehr
NASHVILLE, TN — Maybe Tennessee’s property tax rate formula should be a required mathematics lesson in public schools. It’s simple arithmetic, but questions come up when people talk about a $1 tax hike.
Meanwhile, a petition is being circulated for a Dec. 5 referendum to cap tax property rate hikes at 2-percent. It’s a month after the Presidential election because of laws on ballot initiatives. This one needs enough Metro residents’ signatures to equal at least 10 percent of voters in the Aug. 6 primaries. See 4goodgovernment.com on Facebook.
Officials say Metro hasn’t had a property tax hike since 2012.
Below are property tax calculations in the wake of Mayor John Cooper’s proposal to raise revenue to fill holes in an unstable budget suffering from decisions before his election. Then there were tornadoes in March, and the coronavirus quarantine is strangling sales tax revenue streams to a trickle in a town that attracts visitors to spend money here.
A home valued at $200,000 — as appraised for tax purposes — is now taxed at a rate of $3.155. That’s $3.15 plus half a cent in the Urban Service District. The owner of that home has a property tax bill of $1,577.50. The proposed $1 increase on today’s rate puts it at $4.155. It’s an increase of 31.695 percent. The proposed rate will result in a tax bill of $2,077.50 on a home valued at $200,000. The tax hike is $500 annually.
Mortgage companies collect monthly payments, so those bills will increase before tax bills are due. The increase on each of 12 payments is $41.67. [$500 divided by 12 = 41.67.]
At nashville.gov/Trustee/Calculate-Taxes.aspx, a Tax Calculator asks if the property is in the Urban Service District, Rural Service District, Central Business Improvement District, or the Gulch Business Improvement District. They have different rates.
norada.com says Nashville’s median average home value is $246,321. That home’s property tax bill would go from $1,942.85 to $2,558.66 — an increase of $615.81.
Davidson County Property Assessor Vivian Wilhoit doesn’t set tax rates. She appraises property for the tax formula applied by the county trustee. Wilhoit says an average dwelling in Nashville is worth about $250,000. Many are worth $175,000 to $200,000.
Growth in the tax base is one of a few ways local governments can increase revenue. “Growth in Nashville is not flat,” Wilhoit says. “It’s still climbing. We know what the tornado has done. We will see what the virus will do.”
A Nashville TV station has a chart on the effect of a $1 rate increase for a home valued at $300,000. To get the cost of that home’s tax bill, and the proposed increase: Divide the appraised value of $300,00 by four to get the assessed value of 25 percent which is $75,000; Then divide that by 100 to get 750, part of the tax formula of what’s charged per $100 of the assessment; Then multiply $3.115 by 750 and get $2,336.25, the current property tax bill; and then calculate the effect of the proposed rate of $4.115 by multiplying that rate by 750 to get $3,086.25, or $750 more than the current bill.
Mayor Cooper “has a lot of hard decisions,” says Rick Williams who advocates changing Metro’s charter to protect property taxpayers. “Then the tornado hit and the pandemic took the [sales tax] revenue stream away.”
Williams, chairman of Save Our Fairgrounds, is “not being critical of Mayor Cooper,” who started with a $40 million revenue shortfall. His predecessor calculated the sale of parking meters to raise money.
“Part of this is to stop the stadium,” Williams says, describing many petition advocates as “Save The Fair Ground folks … It’s sad this is going on when they’re trying to build a stadium for billionaires.”
Williams says, others plan another site — notaxfornash. He anticipates council members will suggest spending cuts and tax hikes of 12- and 20 percent.
Current and Prospective Tax Rates for Urban Service District Homes
Value Taxed Rate Now $1 Proposal 12% Idea 20% Idea
……………… $3.155 $4.155 $3.533 $3.786
Tax Bill Tax Bill Tax Bill Tax Bill
$200,000 $1,577.50 $2,077.50 $1,766.50 $1,893
$250,000 $1,971.87 $2,596.87 $2,208.12 $2,366.25
$300,000 $2,336.25 $3,086.25 $2,649.75 $2,839.50
Mayor John Cooper has proposed a property tax rate increase of $1 to fill a budget shortfall. That’s an increase of 31.695 percent, nearly a third more. Other officials are discussing spending cuts and tax rate hikes of 12-20 percent, or: 37.8 cents more on the current rate; and 63.6 cents more.
Chart by Clint Confehr