THE PROBLEM
Across the state, it’s becoming increasingly difficult for hardworking Tennesseans to afford a home, and local property taxes are one of the main culprits. In the past year, dozens of local governments have passed huge property tax increases. Nashville raised property taxes by 26 percent, Kingsport by 24 percent, Jonesborough by 28 percent, Mt. Juliet by an egregious 164 percent, and the list goes on. These exorbitant increases are particularly hard to stomach when local governments spend taxpayer dollars on frivolous amenities like pickleball courts at the expense of core government services. Property tax increases are leaving lower- and middle-income families feeling the very real threat of being priced out of their homes—even if they own them outright. This problem isn’t surprising given that Tennessee is one of only four states without any restrictions on property tax increases, along with Hawaii, Vermont, and New Hampshire. In a state that prides itself on a low tax burden, without common-sense limits on property taxes, local governments have an outsized influence on the rising cost of living.
OUR SOLUTION
Tennessee stands for allowing taxpayers to keep their hard-earned money, which is why Beacon Impact’s legislative proposal sets a common-sense cap on how much local governments can raise property taxes. Such a cap allows for a reasonable rate of increase while preventing constituents from being hit with large, unexpected tax hikes. We recognize local governments may need to raise property taxes above the cap, but assert that constituents should approve such increases. According to the most recent Beacon Poll, 90 percent of Tennesseans support placing a limit on how much property taxes can increase each year, highlighting bipartisan consensus.
HOW IT WORKS
Beacon Impact’s legislative proposal caps the increase in revenue that cities and counties can collect from property taxes at 2 percent annually, plus inflation. Local governments could also bank unused years of increases and raise property taxes up to 6 percent plus inflation every three years. If local governments wish to raise taxes above the cap, they must put the issue on the ballot via referendum for voters to decide, like the process for raising wheel taxes. The proposal exempts revenue from new construction from counting against the cap, allowing localities to fund the expansion of services to new areas and promote growth. The proposal doesn’t prevent a government-operated utility from raising rates to ensure self-sufficiency.
STATUS: This bill has been filed as SB 2064 (Watson) / HB 1873 (Zachary).