Nashville marginally cuts local grocery tax in final $3.8B budget

Nashville’s Metro Council has passed the city’s $3.8 billion budget for the upcoming fiscal year.

The council approved a revised version of the mayor’s proposal Tuesday night. The so-called “substitute” budget, introduced by Budget and Finance Chair Councilmember Kyonzté Toombs, made roughly $9 million in changes to the mayor’s proposal. Changes include:

• an additional $2.1 million for the Eviction Right to Counsel program
• an additional $1.25 million for the Office of Homeless Services
• a $1 million increase to Metro’s allocation for the Barnes Housing Trust Fund
• $1 million for a performance audit of Metro Nashville Public Schools
• roughly $400,000 for the non-police response program REACH
• restored funding for the Office of Entertainment
• additional spending for nonprofits like The Contributor, The Branch, Neighbor to Neighbor, Pet Community Center, MAC Workforce, the Urban League and Music City Construction Careers.

Many of these changes were requested by residents during the annual budget public hearing earlier this month. Toombs noted that requests made during that meeting regarding funding for Nashville General Hospital were addressed through “additional financial resources” not represented in the substitute.

Toombs’ version of the budget was endorsed by the mayor. While it prevailed, Councilmember Zulfat Suara pointed out that, in the case of the budget, the council’s impact is minimal — their changes amount to less than 1% of the total budget.

“It’s a mayoral budget,” Suara said. “Think about it. It is a $3.8 billion budget. The chair is only able to move less than $9 million. And, so, if people really want to make an impact on the budget and they want the conversation to start, they start with the mayor before it’s published in May.”

Ultimately, the substitute budget was approved with 35 votes in favor. Councilmembers Courtney Johnston and Jeff Eslick voted against.

Reduced grocery bills

Much of the debate focused on a minimal reduction of the grocery tax built into the budget. The mayor incorporated a half-cent cut to the local option grocery sales tax. While Toombs said she was interested in a further trim, she explained the “numbers were not on my side, unfortunately.”

Some councilmembers did take issue with the scope of the reduction, while others urged property tax relief instead of focusing on the grocery tax.

Councilmember Quin Evans-Segall sought to amend the substitute and remove the grocery tax reduction entirely, so that Metro could reallocate those dollars toward affordable housing.

“I weighed the conversations we’ve had around ‘is the juice worth the squeeze’,” Evans-Segall said. “That family is going to save $6 a month. And that’s all families, not just those who need it most. Or, whether we can recommit that money to building housing and putting it in the Barnes Fund, which would build housing for folks who are really struggling.”

The tax reduction was made possible after the state legislature passed a law this session allowing Metros to reduce their portion of the grocery tax (Nashvillians currently pay a 2.25% tax on groceries that goes to the city, and a 4% tax that goes to the state). However, the state opted not to adjust its portion, the larger share.

Councilmember Sandra Sepulveda said, because of this, the city’s half-cent reduction is the wrong approach. Rather, Sepulveda urged the state to eliminate the tax entirely and close corporate tax loopholes to cover the cost.

“They keep putting a fake bill before the state legislature that has no source of funding, when there is an option to close the corporate tax loophole and give an average revenue of $891 million to the state of Tennessee … So no, I don’t want an option to end the grocery tax for counties, cities, municipalities,” Sepulveda said. “I want the state of Tennessee to end the grocery tax, and it is shameful — shameful that they don’t.”

The grocery tax reduction will take effect in the fall.

Downtown funding

In addition to the operating budget, the council also approved the annual budget for the Central Business Improvement District, which funds services for downtown Nashville. That includes things like street cleaning, beautification projects, downtown ambassadors and off-duty law enforcement. The CBID dollars are administered through the Nashville Downtown Partnership.

The budget approval comes after the council rejected what was, effectively, the same budget earlier this month over various concerns about NDP’s practices. This included the hiring of off-duty Tennessee Highway Patrol officers and its management of the public library garage that caught fire last year.

In initially rejecting the budget, the council expected the NDP to come back with a revised version for consideration. Instead, the same budget was re-submitted with a $1 difference.

Councilmember Sean Parker, who voted against the CBID budget in both considerations, called the $1 adjustment “cute.”

“We’ve heard substantive concerns about this entity for the last 18 months,” Parker said. “We have rejected the budget they sent us, we sent it back to them, they did this cute little movement of a dollar … We are the oversight entity of this body. We need to be the adults in the room, vote this down and have them send us a budget we can approve.”

Ultimately, the CBID budget was approved with 23 votes in favor. Ten councilmembers voted ‘no,’ and three abstained.