America's Property Tax Advisor

Tennesse Property Tax Rate Cap Proposed


Legislation is currently in the works that could cap property tax increases in Tennessee.


Even before the bill is formally filed, critics are lining up against the plan.


Basic Fiscal Responsibility


State Senator Mike Bell is working with the Beacon Center of Tennessee to formulate the property tax rate cap. If the proposed bill becomes law, it will limit cities and counties to a 5% annual property tax rate increase without voter approval. The cap would fluctuate annually based on inflation, plus an additional 2%.


Mark Cunningham, a spokesman for Beacon Impact, the lobbying arm of the Beacon Center, told The Tennessean that the efforts to cap taxes should not be seen as a partisan issue but one of “basic fiscal responsibility.”


“Other states have this in place so local governments cannot pillage taxpayers whenever they feel like it,” Cunningham said. “Local government can do whatever they want. They just need to convince their constituents why it’s a good idea. Anytime you put an issue in voters’ hands, it’s always a good thing in our opinion.”


Unintended Consequences


Thirty-four states have some form of a property tax limit. However, research shows that tax caps often have unintended consequences, including reduced funding for education and important services.


When property taxes are capped, local governments often turn toward other revenue sources such as sales taxes, or charges and fees for services, according to Tracy Gordon, a senior fellow with the Urban-Brookings Tax Policy Center.


Opponents Speak Out


State Representative John Ray Clemmons told The Tennessean that capping the property tax at 5% statewide without going to voters would have a devastating impact on the state’s already underfunded public schools.


Senate Minority Leader Jeff Yarbro agreed saying that unless the state has a plan to dramatically increase its funding for local schools, the proposal for a tax cap is “reckless.”


The Legislators say they are skeptical that the proposed legislation will pass. “I think the General Assembly would be good enough at math to stop this from advancing,” Yarbro said.