Understanding the Impact: Nashville Property Tax Increase Explained with Guest Ben Cunningham

Ben Cunningham and Lonnie Spivak.

Lonnie Spivak

This is your show, right? The podcast that covers the latest on Davidson County, the state of Tennessee, and issues that affect us right here at home. I'm your host, Lonnie Spivak political strategist and former GOP national chairman. Together, we'll dive into policies and decisions that impact your everyday life. Today, we're tackling a topic that affects every homeowner, renter, and business in Nashville.

And that’s property taxes. Property taxes fund essential services like schools, infrastructure, and emergency responses. But rising home values and recent tax hikes have many wondering how much is too much? While Nashville's property tax rate is lower than the national average, rapid property appreciation has driven up tax bills, straining homeowners, renters and businesses alike. In this episode, we'll break down how property taxes are assessed, with Ben Cunningham, founder of Tennessee Tax Revolt and Nashville Tea Party.

We'll discuss the economic impact of recent increases and what another hike could mean for affordability, business growth and the city's future. So let's get into it. According to Axios, effective property tax rate in Nashville as of 2022 was reported at 0.81%. Now, this is lower than the national average. However, despite the lower rate, the rapid appreciation of property values has led to increased tax bills for homeowners.

For instance, in 2017, the reappraisal of property taxes in Davidson County saw a median increase of 37%, which despite state laws mandating limits and adjustments to the tax rate to prevent revenue windfalls. This still resulted in higher tax bills for many residents. So Ben, welcome to the program.

Ben Cunningham

Thank you.

Lonnie Spivak

A lot of you here. Now you and I have known each other for I think it's been about.

Ben Cunningham

Two damn long.

Lonnie Spivak

Well, almost 20 years now. We have worked on two transit bills. We fought property taxes. We worked on a referendum for mayor. We worked on referendums for property taxes. And you have really made this your mission to fight property taxes and unfair taxation in Nashville.

Ben Cunningham

Well, if you believe in limited government and you've got to cut off the the power supply of government, which is taxation, you've got to make them make the same tough choices that we have to make as homeowners every month. And that is how do we live within our means? And we've got to force government, to to live within their means.

I don't like to, but it's a local level. Thank goodness. They do have to have a balanced budget. So unlike the federal level where they could just.

Lonnie Spivak

Now, that's a little deceiving, because the city of Nashville has more debt than the state of Tennessee. And just think about that. How one look, one county, not even the largest populated county, has more debt than the whole state of Tennessee.

Ben Cunningham

Oh it's crazy. And in addition to the the debt that's on the books is the pension and health care, deficit or unearned,

Lonnie Spivak

Unfunded liability.

Ben Cunningham

Unfunded liability, for the future for these retirees. That's not even on the books. In terms of the balance sheet, what is it is and what's called the kaffir, the the, annual report. But, basically, you're right. You're right. Not only not only do we have high taxes in Davidson County, but we borrowed a bunch of money and we're going to pay that back.

Somebody's going to have to pay it back. Our children or grandchildren or whoever remains in Davidson County. As we'll visit, we'll talk about a lot of people are moving out of Davidson County. The net migration over the last ten years is outbound. And the other surrounding counties are inbound. And there's some really good reasons for that, which we can talk about.

Lonnie Spivak

So, over the last ten years, we've seen, what, two real property tax increases, really, with the most of those being in the last four.

Ben Cunningham

Right? The big whopper in 20 2021 was when it took effect. And we've got a good graph, here, of the growth in the property tax revenue versus inflation. Freddie and, the Metro Council people always talk about, oh, we just don't have enough money. But in fact, revenue exploded after that 20, 20, 34% property tax increase.

And it has grown much, much faster than inflation. Since that time, it has it kept up with inflation. During if you go back to 2014, it kept up with inflation until 2020 when when we had the big tax increase.

Lonnie Spivak

Now that tax increase came in under Mayor John Cooper. Right. And that was right off the heels of Covid where, you know, the whole city, whole state was really shut down for a long period of time and businesses were going out. And, you know, it's understandable that the the city would be a little strapped for funds because, you know, they do have to have, balanced budget.

But, you know, Mayor Cooper said that this was just it was an emergency. It was necessary. We had to have it to survive. But then we got hit with 37% property tax.

Ben Cunningham

Well, one reason it was an emergency is because it has been mismanaged for many, many years. And the Comptroller of the currency, Comptroller of Tennessee, basically told Mayor Cooper, you got to do something. You remember there was a report from the comptroller, and he said, basically, you have mismanaged the the finances of Metro Nashville for so many years and so badly that you've got to do something.

Lonnie Spivak

And they you've had that they threatened to take us.

Ben Cunningham

Over, threaten to take over, just like they're threatening to take over the the school system in Memphis. So it was it was for a cause. But, in fact, they let the spending stay out of control for so many years that something had to be done at that point, and something was done. It was a huge tax increase.

And as you can see from the graph, which I think you'll be able to put on the screen, the revenues exploded, and grew, over that ten year period, grew about three times faster than inflation. So this is not a matter of not having enough revenue. It's a matter of not managing what you have and not staying within your budget.

And we see this in Democratic city after Democratic city, and Nashville is a there's a blue island in the red. The big red.

Lonnie Spivak

I started to I've heard it explain that we're a blueberry in a strawberry pie. Yeah.

Ben Cunningham

That's right. That's a good one. And it is. You see this in so many cities and in Texas. There was a joke the other day on the internet about Austin seceding from or Texas seceding from Austin, because they're so, radical in Austin. And it's the same way here. And the results of the traffic transit, excuse me, referendum last year really showed us, I think it was a wake up call for conservatives.

And it showed us how blue and how Democrat and how liberal Nashville has become. This this is going to be an uphill battle to bring Nashville back to some kind of fiscal center.

Lonnie Spivak

And now when when mayor O'Connell was running for office, he talked about keeping Nashville affordable so people could stay here. Now, the way Nashville set up, the mayor really has all the power when it comes to the budget. Whenever he he proposes a budget, 98% of whatever he proposes will typically get approved in one way or the other just because of our funky budget process, which they have started.

They're in the middle of right now.

Ben Cunningham

Yeah, they are. And, it's it's interesting. This is a reappraisal year 2020.

Lonnie Spivak

So tell people what that means.

Ben Cunningham

That's every four years. By state law, every county has to go through a reappraisal where they go out. Appraisers go out and appraise property, and they, find out what the new values are, how much the property values have increased, and they will have increased substantially in Davidson County, most people are talking about a 25 to 35, maybe even more of an increase in property value.

But by state law, once they, find out how much property has gone up, then they have to adjust the rate so that it's revenue neutral. And we'll get that probably in June. And not to get too deep in the weeds here, but the problem, one of the problems with raising property tax rates, in a reappraisal year, and it may in fact not be a problem for the tax raisers, but it compresses the time frame that the Metro Council has to deal with this, because it delays the determination of that new rate until June.

And then the council has to decide what it's going to do beyond that. And they have to have public hearings and they have to go through the whole process. So it gives, the public and the press and everybody involved less time to get involved and raise their voices and say, hell no, I don't want a property tax increase.

But, that may be, frankly, I'm being cynical here, but that may be one reason why we see so many property tax increases in reappraisal years. Plus, it's kind of a confusing process. You have to explain to people what we've just talked about, the fact that it's reappraised, that the the rate will go down, but it doesn't mean your property tax will go down and that's the thing that's really people need to understand.

Your property tax bill is not going down. In fact, if you're if your properties increase faster than the average, it'll go up a little bit. So this is not a matter. And people talk about oh our rate in Davidson County is low. Well in fact in Davidson County the Sycamore is two, which is a great, think tank here locally.

Did a study, last year about the our burden, our dollar burden of property taxes. Davidson County has the highest burden per capita of any county in the entire state, and it's not even close. Williamson is number two there, $1,291 per capita. Davidson is $2,150 per capita. So when they talk about, oh, the rates are low, rates mean nothing.

Those rates are applied our time. But you know, they're multiplied times the value of the property. That's how you get your property tax bill. So rates can fluctuate all over the place. But what you pay, what you write your check for or what you pay in escrow every month, that's what's important to taxpayers. And in Davidson County, if you measure it per capita, it is the highest per capita tax burden, county tax burden in the entire state.

Lonnie Spivak

Now, this is necessary in Tennessee and Nashville because we don't have the state income tax, right? So the city cannot levy an income tax on us. So the only way they are. No. That's right. So the only way they really have money to fund city services is through property tax. And they get a portion of the sales tax, sales tax.

Ben Cunningham

And some of the wheel tax, goes to the, in the county, there are other fees and water fees and user fit that.

Lonnie Spivak

But the biggest is property.

Ben Cunningham

The biggest is property tax. About 60% of the revenue of Davison County comes from property taxes. So it is by far the biggest, chunk of.

Lonnie Spivak

So so when you have a reassessment, what happens is let's just say for this year, or last year, my house was worth $200,000. And they come through and they reappraise it. And they say the new value of my property is $350,000. So you don't pay tax on that whole amount. You pay tax on what's called an assessed value.

Lonnie Spivak

That's and that's typically about half of what the appraisal is that right.

Ben Cunningham

About 40%.

Lonnie Spivak

And and so that's what you're writing in your check on. So the bigger that increase the bigger your check's going to be.

Ben Cunningham

Yeah.

Lonnie Spivak

And I mean and we have we have two main taxing districts in Davidson County. We have what's called the Urban Services District, which if you get your garbage picked up by the city or you live pretty close to a liquor store, you're in that urban services district. If you live in the outer collar of the county, you pay for your own sewer and you pay for your own garbage.

Lonnie Spivak

You're what's called the, General Services District. Now, the Urban Services District has a slightly higher rate than the outer, but you're paying for those additional, services like garbage pickup and sewer and all that other stuff.

Ben Cunningham

Right. This is basically a holdover from before metro government. The urban services district is roughly equivalent to the whole city of Nashville. And the General Services District is roughly equivalent to everything else which would which before metro government, before city and county consolidated. It was basically those areas that were in the county.

Lonnie Spivak

So what kind of burden does this high property tax. What does it do to our growth? Like residential and business?

Ben Cunningham

Well, people make decisions based on the the amount of taxes, we all make those decisions. That's why people are moving to Tennessee, from California, from New York, from everywhere around the country. We're seeing a huge influx of people moving into Tennessee. And it's because our tax rate is low. We have we're typically when you see states ranked by tax burden, we're typically around 47, 46, in in those rankings, and Alaska is always the lowest, but they don't count because they get a lot of oil revenue.

And, and that would be nice. But anyway, so we're one of the very lowest taxed, states.

So part of that has to do with just the fiscal responsibility of our state legislature,

Ben Cunningham

It’s the culture of Tennessee. We we don't like big government, and people fight against big government, and big government is taxation. That is that is the embodiment of big government. And if you can keep taxes low, then you can keep government limited. And that's why it's so important that we do that, that we keep, this monster from eating too much of our budget and that really what is what this is all about.

And, and I think it's lost so many times in the rhetoric of the politicians. This really is about each individual taxpayer looking at their own family budget and saying, yes, I'm willing to pay more in property taxes or hell no, I'm not willing to pay any more in property taxes. I'm going to say to my government, to my county government, I'm going to say to Freddie O'Connell and the Metro Council, you can't have any more of my money.

You cannot have any more of my money. You're going to have to make the same kinds of tough decisions that I'm making my house all every month. You're going to have to choose between priorities. You're going to have to say, this is more important than this. And that's the one thing politicians will almost never do unless they're forced to.

And that's what we have to do. We have to force them into that position where they have to choose between one priority A and priority B, because there are always people out there. And we saw it in the Metro Council meeting last night, as a matter of fact, where all these NGOs came up to Metro Council and said, we've got have more money.

If we don't have more money, we won't be able to.

Lonnie Spivak

Accomplish all of that because.

Ben Cunningham

Important mission.

Lonnie Spivak

The Department of Government Efficiency in Washington, they're cutting off all those NGOs.

Ben Cunningham

For that.

Lonnie Spivak

Money. So they're coming crying to the state right now.Ben Cunningham

But that's really it.

Lonnie Spivak

The migration of people, though, because because our property taxes are so high. That's why areas like Smyrna, Rutherford County, Wilson County, Mount Juliet, that's why those areas are just exploding in population.

Ben Cunningham

Are in fact.

Lonnie Spivak

There's so much I mean, really I mean, I think and you can correct me if I'm wrong, but most of our city employees don't even live in the county because it's too.

Ben Cunningham

Expensive. Half of the city employees, half of the city employees live outside of Davidson County. We we just had a transit referendum. We talked about November. The in November last year, the guy who's on the, mayor's staff and who is the prime, consultant for two transit lives in Robertson County. I was listening to a podcast the other day where he was on there, and he was talking about the fact that he commuted every day from Robertson County.

And half of these people don't live. And the reason they don't live in Davidson County is because they can't afford to live in Davidson County. And when we look at the net migration figures, another chart here, from the University of Tennessee, Davidson County is the only county in the Middle Tennessee area that's experiencing that outmigration. It started about ten years ago and has accelerated and it's still today, even in 2023, 24.

Ben Cunningham

This we have those stats show that people are moving out to adjacent counties and, you know, when half of your employees work, half to live in another county, that's a really bad that includes.

Lonnie Spivak

Our police officers, our firefighters.

Ben Cunningham

Absolutely.

Lonnie Spivak

Really. And and, you know, Mayor O’Connell's really made a big thing about affordable housing. We have a super radical Metro Council that is all about, affordable housing and, unhoused persons or whatever they say.

Ben Cunningham

Term is.

Lonnie Spivak

And, and so this property tax increase will not just increase how much it costs to buy because your monthly payment on your property tax will be higher each month, but it'll also in creased how much you pay in rent because those companies those apartment companies or people who are renting their condos or whatever are not just going to absorb, a 30% increase in their tax, they're going to pass that on.

Lonnie Spivak

And so even when they're trying to do everything they can to lower that costs, they're really by increasing this property tax, making it jump exponentially. Now one of the things that we talk about is NEST that Nashville essential structures for togetherness nonsense where they're trying to get rid of this single family zoning to up zone, all these middle Tennessee neighborhoods.

Lonnie Spivak

Really, that's just so they can increase their property tax revenue.

Ben Cunningham

Oh, yeah. Yeah.

Lonnie Spivak

And they're just trying to rapidly grow as fast as they can at the same time, they're making everything else harder to get around the city.

Ben Cunningham

Right? Yeah. It's a money grab. I mean, it's like you say it's increasing the property tax base by putting these what they call accessory dwelling units in and, multiple dwelling units. They've tried this in California and people hate it. I saw a news report the other day of a guy who had just his neighbor had just built this two story accessory dwelling unit, basically an apartment in his backyard, and was right up against a neighbor's fence.

And his pool was there. And his family, you know, swims in the pool. And then now they're going to have this the people next door looking at their window into their pool area. And they just absolutely hate it. But it's this, it's this, you know, liberal, utopian vision that, they have and they think it's great, wonderful for people.

Lonnie Spivak

So other than transit that nobody rides. Do you have any other examples of things that Metro's wasting money on?

Ben Cunningham

Well, the. Yes. The all of the, the boards and commissions, there is and that's the thing you really don't know. It's kind of like this USAA ID that people are now seeing what a rat's nest of corruption and incompetence and basically criminal incompetence. You know, when incompetence comes, gets to that level, it's criminal incompetence, basically, as far as the taxpayers concerned.

But what we've got to do is and we don't know all about the budget, that's the problem. It is not a transparent process. The mayor, like you said, the the budget process is specified in the Metro charter, gives the mayor all the power and he puts together the budget. The the council can tweak it a little bit, and they usually will kind of make a show of adding or subtracting a few things here and there.

But basically it's the mayor's budget. It passes, and until we force the mayor to start making some hard decisions, frankly, we don't know what.

Ben Cunningham

Life is in the budget.

But if you look at the, the growth in the revenue, it is three times the rate of inflation. Now, that's that is the the.

Lonnie Spivak

And they're doing it as fast as.

Ben Cunningham

They're spending as fast as it comes in.

Lonnie Spivak

So that's just.

Ben Cunningham

What they will do until we as taxpayers say I'm sorry guys I've looked at my budget I can't afford.

Lonnie Spivak

Now I say this all the time. The thing that I think is just the biggest waste of money, are these dang speed cushions, bike lanes and reflector poles. But there are lots of examples from different art commissions. Like they'll find these crazy plays and things like that, or similar to the USAID will be like this comic book for whatever or different events that you know, for the libraries or whatever.

Some of these things are just kind of out of left field and don't really have anything to do with governing Nashville.

Ben Cunningham

And a part of that is the reliance on federal grants, the transit program they just passed, the mayors were lying, to the extent of about 25 to 30% of the total funding on federal grants, which.

Lonnie Spivak

May have been DOGEd

Ben Cunningham

Fruition. Hopefully now that was going to tighten this purse strings. But in addition, the point I was trying to make, in addition to the money that comes from the federal government, is all these restrictions that come from the federal government, all these strings that are attached. And basically they take the local zoning and the local taxpayers influence out of the loop.

Totally. And you are beholden. Freddie is beholden to all these federal regulations about zoning and the and the high density stuff, the bicycle. That's the reason we have so many bicycle lanes, all that stuff they have to put into those grants and say, we're going to do this for you, federal government in order to get the grants. And basically it takes the local government out of the loop.

And the local taxpayers, they don't have any say.

Lonnie Spivak

Hopefully the Trump administration will start sending that back.

00;23;53;16 - 00;24;01;00

Lonnie Spivak

I mean it what we know that we have a very radical left wing Metro Council.

Ben Cunningham

Oh, gosh.

Lonnie Spivak

And we have a mayor who is hell bent on giving us another property tax increase. What can we do? Is there a way do you think we can slow it down or prevent it? Or is it just baked into the cake already?

Ben Cunningham

You know, the Metro Council is very left wing and we're it's going to be tough because they have pretty much rubber stamped anything that mayor O'Connell has proposed. In fact, as we saw from the Metro Council meeting yesterday, they're pushing even harder to spend more money. So they're going to be, in the can for is much of a property tax increase as possible.

People have got to to contacts and local news media that's going to be huge. They've got to get down there, and talk to their Metro Council person, make it obvious that they're going to be primaried. They're going to have a challenger next time. And hopefully, you know, the conservatives and the Republican Party will get active and involved.

But I'll be frank with you, it's going to be an uphill battle. And we have seen this in other areas Minneapolis, San Francisco, Portland, when the left wing gets in control, they they're the Democratic Party is the party of government. It really is what's going on here? They have become the party of government, and they draw all their sustenance from government.

So we are basically, threatening their lifeblood when we threatened to decrease taxes. So I would say get in touch with your local news media, let them know how you feel about it. That's probably going to be the most effective way to fight this.

Lonnie Spivak

Now I agree this is going to be an uphill battle to stop this property tax increase. But really the most important thing and now we don't have another metro election until 2027. But if you are in a council district with a super left leaning council member, then think about maybe running for Metro Council.

Ben Cunningham

Absolutely.

Lonnie Spivak

If if you have not voted it and local elections, that's where you really need to get involved. Because really the things that affect your day to day life aren't, aren't really coming from Washington. They're coming from your school board, your Metro Council, your mayor and the other agencies that are encompassed within metro government. And so our it's really important that if you're not registered to vote, go register, be ready for 2027.

And, think about running for school board or Metro Council.

Ben Cunningham

Yep. And it's so important to understand the future. What is going to happen if we don't act now we're going to turn into Portland. We're going to turn into Chicago. We're going to turn into all these places where people have moved out of the Democratic strongholds and of course, that decreases the property tax base, and it motivates them to raise taxes even more.

And you get in this kind of death spiral that we see in Chicago, in Portland and other these other blue liberal, super liberal cities. And we can avoid that right now. We can avoid that by stopping these property tax increases, getting people in there that are fiscal fiscally responsible. But we are you can see people are moving out.

Here's another graph of the of the population growth of the surrounding counties versus Metro and of Davidson County. Davidson County, has not returned to the population they had before the before the pandemic. And the other counties are growing much, much faster. And the if you look at the net migration, people are moving out despite the fact that that, in the last ten years, revenue, property tax revenues up 76%, they've got plenty of money.

And they will they're going to continue to raising taxes and they're going to continue destroying the tax base.

Lonnie Spivak

Yeah. Sooner or later will wind up like Detroit did, where there are so many empty lots because you just can't afford the tax to live in those areas. And then the property values will start to fall, and then they'll have to raise property taxes again to make up for that shortfall. Right. They're kind of in a death spiral right now.

And we hope that we can, either bring some sanity through state leverage or, elect leaders who care about this thing in a way that's more fiscally responsible.

Ben Cunningham

We've got to to save Nashville, to save Davidson. Okay.

Lonnie Spivak

Well, Ben, thanks for joining me today.

Ben Cunningham

Thanks a lot.

Lonnie Spivak

I hope you enjoyed the episode. You can find me online at your. So write us and everywhere you find podcasts. Thanks very much.

Ben Cunningham and host Lonnie Spivak discuss Nashville property taxes