Taxes, taxes, taxes
November 26, 2019
I’ve been working on a couple of different, and important, analyses over the past couple of weeks. First, my proposed legislation to stop working with a for-profit prison operator in the Metro Detention Facility (MDF), and second, the impact, both to taxpayers and to our government, of a potential tax increase.
Looking at the upcoming legislation that I’ll file regarding the prison, my plan is to move MDF operations to the Sheriff’s office (DCSO). This will require roughly $20 million per year, and it will need to be a dedicated revenue stream so we can ensure the startup and operational costs are covered. Today, the state pays CoreCivic roughly 40% more per inmate than they would pay DCSO to operate the MDF (that’s your tax dollars too, and my plan would save the state $15-20M per year). If DCSO takes over operations, a recent study, published in December 2018, shows that the costs would be about the same as what the current CoreCivic contract pays. So when we end that contract, we would have, roughly, a $20 million gap to bridge. This is about $50 per year for the average Nashville homeowner.
There are two important items of note in my upcoming legislation:
We cannot ask DCSO to take this on without a dedicated revenue stream. That money will have to come from somewhere. If the community cannot make a commitment for this funding, then we cannot proceed with ending the contract. As a part of the upcoming legislation, DCSO will be required to provide annual audited financials to council regarding the operation of the MDF in advance of the budget season.
Secondly, this will require time. DCSO has some major projects over the next 13-14 months. After that, it will take around a year to make the transition. My bill is to take on this responsibility, including cost, no later than June 30, 2022. The goal is to have the dedicated revenue stream in place by then. This gives the council and the mayor two budget seasons to get this done, with the revenue in place for DCSO to get started on this at the start of FY21, which is 19 months from now.
Speaking of taxes, earlier this week I tweeted about the maximum possible tax increase that this council could pass this year based on Charter restrictions. The highest increase we could pass would move the property tax rate from $3.155 (current) to $4.69 per $100 of assessed value. Looking at the average value of homes in Davidson County (just under $300,000), this would be an increase of about $1,200 per year per household. Hefty, no doubt, and definitely up for a serious debate.
To be clear: $1.53 is the maximum that could be passed. This amount would allow us to fill many, many holes (and it could provide the revenue stream for DCSO, as pointed out above). In thinking about that $1,200 per year cost, I think it is important to note that locally and nationally, teachers pay between $500-1000 per year on classroom supplies (https://tinyurl.com/to9apwl).
This $1,200 a big ask, and I don’t know that we can expect to have that large of an increase at once. It’s important to me that we lay out the options, from no tax increase to looking at the maximum increase, with the likely answer somewhere in the middle.
I suspect we will end up with a mix of savings initiatives and a tax increase next year. Over my career, I have helped dozens of companies find savings that they didn’t know they could find. It’s never an easy task, but there are always ways that we can find savings, or “cut the fat”. I worked with Fortune 500 companies throughout the Great Recession. It was difficult to find savings year over year over year, but we did it, sometimes even millions of dollars of savings. There is no doubt that we need to do that.
I support Mayor Cooper and his team’s hard work to find a solution. I believe he has the financial acumen, the will, and the compassion to cut everywhere possible while ensuring our employees and residents are impacted as minimally as possible. I will do all that I can to help him.