Wednesday, September 06, 2006

Response to Gail Kerr's Tennessean Column

Below is the email I sent to Gail Kerr regarding her Tennessean column about our property tax charter amendment. Gail sent me a very gracious reply and said she would be writing more about the issue.


A few comments in response to your column:

1- "Some folks believe a petition-driven November referendum could mean their property taxes will never again be raised without their vote. They are wrong."

You are absolutely correct. In fact, we had a number of people who expressed opposition to our proposed charter amendment because it was too modest. They wanted more of a Prop 13 type of proposal that would freeze tax bills. The proposed amendment is comparable to the method now used to raise the local option sales tax rate, i.e., the revenue from the sales tax increases each year as prices and sales volume increase but in order to increase the rate a referendum must be held to allow voters to say if they are willing and able to bear the burden of a tax RATE increase.

2 - "It sounds gloriously sexy: give the power to the people to decide when the city needs more property taxes. The strongest
argument against it is Democracy 101: We elect people we trust to make decisions like this."

There are three major sources of revenue for local government. They are 1-the property tax, 2-the local option sales tax, and the 3-wheel tax. State law already provides for a referendum for two of these three revenue sources. As stated above, the local option sales tax rate may never be raised without a referendum. There are three methods available to pass a county wheel tax and two of those involve a referendum. (Metro has its own form of wheel tax and thus state law doesn't apply as regards
the wheel tax but my point is that all other counties allow referendums as an option for increasing the wheel tax.) We are simply proposing that the property tax rate in Metro also be subject to a referendum in the same manner that is already allowed for two other major taxes.

3 - "They won't say it, but I will. Frustration leading to this vote bubbled up because Nashville mayors have passed property tax hikes on top of reappraisals. It's kind of a sneaky way to make the tax hike not look so bad, and it's killing people in hot real estate markets. They got hit with a double whammy tax hike."

I would agree in part that the double whammy is part of the frustration but equally important is the tax rate in Davidson County as compared to surrounding counties. Also important is the fact that surrounding counties have reduced rates during re-appraisals whereas Davidson has rasied them. Below is a graph of the county rates over the last 10 years for Davidson (GSD), Sumner, Rutherford, and Williamson (Here is the source for the data):

The trend is very clear, Davidson has increased the rate as values have increased and surrounding counties have kept them stable or lowered them. The Davidson County rate is now more than $1.50 above these three counties as a result of this long term divergence.

As always, thanks for listening.

Ben Cunningham