I don’t think Mayor Dean is being completely forthcoming when it comes to the effects of his proposed Property Tax increase. Unsaid, but implied, is that the 13% increase will fund Nashville’s needs, now and in the future.

I don’t think that’s going to happen. The Mayor needs us to rely on his budget numbers. But if we do, either taxes go up again later or the Mayor’s numbers were faulty from the beginning.

In his State of Metro address, Mayor Dean assured us, “… after four years, there is little fat left. To make significant budget reductions this year would mean cutting into muscle.” Does this not mean there is still room for cuts. He hasn’t said where the fat is or how much there is, but it’s there. Little or not, shouldn’t we cut all the fat before we start raising taxes? Significant budget reductions or not, shouldn’t we first reduce the budget by all the unnecessary spending possible before asking taxpayers for more money? If there’s still $1M in fat in the budget, why propose a $100M tax increase? Isn’t the truth that we’d then only need $99M? As I said – faulty numbers.

The Mayor originally proposed a $0.53 increase in both the USD and the GSD. When it was pointed out he could not raise the GSD rate by $0.53 without violating Metro’s Charter Mayor Dean reduced the GSD increase to just $0.48; a 4.72% drop from his original totals. That loss would seem to need to be made up with further tax increases. After all, the Mayor assured us we needed every last dime of the original $100M.

Except Metro Finance Director Rich Riebeling says we don’t. Per The City Paper, ““We will still have the same budget total as we did before,” Riebeling said, adding that the administration can make some other modifications to make up the difference. “Effectively, it will be the same budget numbers.” So we didn’t really didn’t $100M? Then why propose it? Which begs two questions. What other modifications can be made so the Mayor can make do with even less? If the Mayor missed a factor as significant as how much he can actually raise our taxes, how credible are the rest of his figures?

Most disturbing is the likely need for another property tax increase next year. Property taxes are levied by formula on 25% of the value of a house and 40% of the value of a business. The value of homes and businesses for their property tax bill is set every 4 years. The last time was 2009. It will be done again next year. Nashville homes will be worth less in 2013 than in 2009. The question is “How much less?”

Again, the Mayor said we need $100M annually and his increase provides it. But for every 1% drop in property value, the Mayor’s projected tax revenues go down almost $1M. According to Zillow.com, a Nashville home valued at $150,000 in March, 2008 was worth just $131,000 in March, 2012. That’s a 12.7% decrease. ForecastChart.com predicts, with 85% confidence, that Nashville’s housing prices will continue to decline through the end of 2014. Which is to say the Mayor’s plan will not raise $100M a year for the next couple of years.

Which means either taxes are going up or the Mayor’s numbers are seriously flawed.

The Mayor said, in his State of Metro address, that he was doing the things needed to grow Nashville’s economy and tax base. Raising property taxes, in point of fact, does neither. Instead, $100M is actually removed from the economy. All taxation reduces the economy. It’s the nature of taxation. While some of it will return via spending after pay raises, not all of it will and the city’s economy will shrink, not grow. Regarding tax base growth,  to the extent people leave Nashville, or don’t come here in the first place, in objection to high taxes, the tax base shrinks as well.

In the meantime, my confidence in Mayor Dean’s budget numbers is shrinking. The only thing growing is my conviction that we’re getting a tax increase this year and another one next year, too.

SEE ALSO:

Mayor Dean’s Property Tax Increase Won’t Raise More Money @ Blue Collar Muse;