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In the realm of property taxation, Tennessee stands among a select few states that do not impose limits on local property tax hikes. However, a legislative proposal could soon change this landscape.
Leading the charge is Rep. Jason Zachary, a Republican from Knoxville, who has introduced a bill aimed at capping local property tax increases. His proposal seeks to restrict these increases to 2% annually over a span of three years, unless a larger hike is explicitly approved by voters through a referendum. Notably, if a city or county refrains from increasing property taxes for two consecutive years, they would then be permitted to implement a 6% increase in the third year.
“This plan allows for flexibility,” explained Rep. Zachary. “If a municipality opts not to increase property taxes for a couple of years, they can carry over those unused increments and apply a larger increase in the third year, up to 6%.”
The bill has arisen in response to what Rep. Zachary describes as “egregious” hikes in property taxes, pointing to recent events in Mt. Juliet, where a significant 164% increase was enacted after an even steeper 400% hike was initially proposed. Similarly, Nashville saw a 26% increase last year, highlighting the need for a more regulated approach.
Public sentiment appears to favor such regulation. A survey conducted by the conservative Beacon Center revealed that an overwhelming 90% of respondents support establishing limits on property tax increases, underscoring the broad appeal of Rep. Zachary’s initiative.
“Citizens of Tennessee are concerned, and so the question is, ‘How do we address it?’ We feel like we’ve got a reasonable, common-sense way to address that,” Rep. Zachary said. “We feel like responding to Tennesseans in this way is something responsible to do, and being one of only four states that does not do that, now is the time to take that action.”
Alex Apple, press secretary for the office of Nashville Mayor Freddie O’Connell, told News 2 in a statement that the city relies on its flexibility to adjust property taxes.
The state requires us to equalize, which means we don’t get any benefit from property value increases without adjusting the property tax rate. In Nashville, our growth has been so significant that we actually keep adjusting our property tax rate lower over time. Last year’s adjustment equaled the fiscal impact of inflation over the previous five years.
Capping property taxes in any way would effectively cripple city services in a time when infrastructure costs have increased dramatically and the state share of local education funding continues to decline.
News 2 reached out to the City of Mt. Juliet spokesperson, but had not heard back by the time this article was published.