Writer: Jerrica DuBois
2 min read March 2024 — Inching toward the November ballot, a few more pieces of Mayor Freddie O’Connell’s transit plan came together at a recent Metro meeting.
A wide range of projects were unveiled, including four bus-rapid transit lines spanning 38 miles, three priority corridors, 14 transit centers, and 24/7 service on 14 routes. The concept maps also revealed plans for improvements at bus stops and intersections, sidewalks around transit centers and stops, as well as new services on eight routes and service improvements on 12 routes.
“We’re smashing the ‘go’ button today, details to follow,” O’Connell said, as cited by The Tennessean. “We’re a big city, and it’s time to act like one.”
Last month, the mayor announced his plans for a transit referendum on the ballot. There are only four major metro areas in the country that do not have funding dedicated to transit, and Nashville joins Orlando, Memphis, and Hartford on that list. While residents will be voting on a transit expansion plan, they are also voting to raise taxes to pay for it.
The specifics of funding the transit plan was also identified at the Metro meeting. O’Connell plans to submit a complete financial proposal by the end of the month, but what has been unveiled so far is that only one tax is planned to be used to fund the transit overhaul: a half-cent sales tax surcharge.
Amanda Vandegrift of InfraStrategies, an Atlanta-based transit financing consultant hired by Metro, explained the reasoning to the committee. “Why the sales tax surcharge only? It is the highest revenue potential option. And by highest, I mean significantly higher than the other five surcharges available” she said, according to WPLN news. “It really makes a lot of sense to focus in on that one source rather than a package of smaller sources.”
For Davidson County, a half-cent increase would raise the current sales tax rate of 9.25% to 9.75%. The majority of the sales tax goes to the state of Tennessee, which has a tax rate of 7%. The remaining amount, which cannot exceed 2.75%, is left to the county to allocate.
According to Vandegrift, there are several advantages of a sales tax surcharge. First, a sales tax is relatively predictable and has a strong growth rate. Second, on a national scale, a sales tax is the most common local funding source for transit. Finally, a sales tax offers the opportunity to shift some of the burden to visitors from outside the county, such as tourists and residents of surrounding counties.
In Tennessee, there are six taxation options to fund transit under the state’s IMPROVE act: sales tax, hotel/motel tax, business privilege tax, residential development fee, local car rental tax, and motor vehicle, wheel tax. The financing of the new Titans stadium has ruled out the hotel/motel tax option, and while it is possible to use a combination of the other options, it doesn’t guarantee public approval. Four different tax surcharges were used in Nashville’s last transit referendum proposal in 2018, which voters rejected 64% to 36%. According to O’Connell, the new plan will be “high-impact and overall low-cost” in comparison to what voters were presented with in 2018.
“We didn’t want to produce an expensive program,” O’Connell said, as cited by The Tennessean. “We wanted to look at a more right-sized approach for the city, given our growth, growth potential, cost of living and quality of life concerns.”
