Some Nashville business owners are concerned that a proposed 31.7% property tax hike could slow down the city’s recovery from the economic downturn caused by COVID-19.
Analysts say many businesses will have trouble affording a property tax increase during these challenging times.
Balancing the Budget
Metro Finance estimates that Nashville will experience a $470 million revenue decline over a 16-month time frame due to the impact of COVID-19 and the March tornado. Mayor John Cooper proposed the tax hike to help balance the budget.
“This is an unprecedented and difficult time for all Nashvillians,” Mayor Cooper said. “Thousands of residents have lost their jobs during the pandemic, and that makes the necessary decision to raise taxes all the more difficult. And as I mentioned during the State of Metro address, the city has thinned its cash reserves to a point where we find ourselves without a rainy-day fund during a stormy season. This is a crisis budget – not a discretionary budget – that will ensure Metro and Metro Nashville Public Schools can continue to meet our community’s needs.”
Can Businesses Afford a Tax Hike?
The timing of a tax hike will make it hard for some businesses to survive, according to Ron Shultis, director of policy and research for the Beacon Center.
“As businesses and workers in our city try to bounce back after being forced to close to fight the COVID-19 pandemic, a property tax increase of this magnitude is something they can ill afford,” Shultis told The Center Square. “Unlike other forms of taxes, like sales or corporate income taxes, property taxes don’t take into effect how a business is faring. We are essentially asking businesses to suffer higher taxes when they aren’t even allowed to fully operate. If we want our city to recover as quickly as possible from this crisis, we need to make it easier – not harder – for businesses and workers to get back on their feet.”
Nashville’s budget must be approved by June 30th and there are likely to be alternative options to the Mayor’s tax hike considered. Tax rates for 2020 will be finalized in August.