Metro finance director touts Nashville's financial health
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Metro's top finance official says Nashville is in great financial health, despite coming off a year in which tax collections and other revenue streams showed modest growth.
Why it matters: Metro Council is set to vote on the city's $3.8 billion operating budget that includes a proposed elimination of the city's grocery tax.
- The tax break comes one year after Mayor Freddie O'Connell and Council raised the property tax rate by 26.64%.
Between the lines: Metro finance director Jenneen Reed tells Axios that Metro passed a new policy last year to maintain reserves for 17% of all operating funds and 50% for all debt service obligations.
- The city received high-quality credit ratings from Moody's and S&P Global.
- "I will say the city is in great financial health," Reed says. "We have a lot of fiscal stability that has been built into our finances."
By the numbers: The O'Connell administration navigated a budget in which the city's key revenue streams were about flat.
- Factoring in ongoing appraisal appeals, property tax collections increased just by $ 14.7 million, which amounted to 0.68%, Reed says.
- Sales tax collections increased by 3.89%, but implementing O'Connell's plan to slash the local grocery tax costs $9.2 million. That means sales tax collections increased by just $19.5 million — a far cry from the economic boom times of the post-pandemic years.
- In response to the flat revenue collections, the O'Connell administration asked some departments to make modest budget reductions.
What she's saying: "There's so much uncertainty in the geopolitical world and the larger macroeconomic environment, that we are trying to monitor that and make sure we're ready for it," Reed says, describing the city's conservative reserve fund policy.
Friction point: Criticism about the city's tax policy increased as homeowners and businesses received their property tax bills. Lower Broadway businesses like Acme Feed & Seed were the loudest critics.
- In response to those critiques, Reed points out the city's tax rate is the lowest it's been in the history of Metro and is "aligned if not lower than most of the counties that surround Nashville."
What we're watching: Council will make final changes to the spending plan before the final vote on the budget Tuesday evening.
- Metro Councilmember Kyonzté Toombs, who chairs the budget committee, unveiled her proposed spending items Friday.
- Toombs proposed $2.1 million to a program helping tenants avoid evictions, $1.2 million to the homeless services office and an additional $1 million to the Barnes housing fund.