A recently completed study of taxing districts in Metro Nashville-Davidson County has drawn the consternation of some councilmembers. The study, performed by government consulting group Raftelis, shows that residents of Nashville’s Urban Services District have been overpaying for some city services. In the decades since the city and county consolidated, city density has expanded beyond old “urban” borders while the 60-year-old tax differential remains in place.
Metro uses two taxing districts to allocate costs and revenues in its annual operating budget: the General Services District (GSD) and the Urban Services District (USD). The GSD encompasses the entirety of Davidson County, and all Davidson County residents pay GSD property taxes. The USD is essentially a subset of the GSD, made up of the old (pre-consolidation) City of Nashville, plus additional areas — like Madison and Antioch — that have chosen to be annexed in exchange for more city services. USD residents receive some city services that GSD residents do not, like streetlights and trash pickup. USD residents pay an additional property tax on top of the GSD tax for these additional services.
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Non-USD district councilmembers — the driving force behind commissioning the study — expected a recommendation that the property tax rate should decrease for property owners outside the urban core. Now these councilmembers dispute the study’s claims that their residents should actually pay more. They asked Metro to pump the brakes on implementation, but the council last week pushed ahead with the recommendations in their approved budget for the upcoming fiscal year. The study found that an old fire protection agreement, specifically, has overburdened the USD, prompting reexamination by Metro officials to more evenly distribute costs across the county.
Fire protection, in particular, has been debated throughout Metro’s history. When the City of Nashville and Davidson County consolidated in 1963, city fire protection services were available only in the USD. In 1977, then-Mayor Richard Fulton pushed for a plan to extend Metro fire protection services to non-USD areas and build five Metro-owned and operated fire halls outside the USD. Fulton’s proposal came with an accompanying GSD tax increase, but USD residents would still pay a premium for these services. That disparity has remained written into the property tax levy ever since.
At the time, there was pushback from councilmembers who represented districts within the USD. In a 1977 Tennessean article, one councilmember claimed Fulton’s plan would lead to USD property owners subsidizing fire services for non-USD residents. According to the Raftelis study, this is exactly what happened.
Based on the current allocation of costs, the study’s authors conclude, USD property owners “pay a premium” for services that all residents receive, like fire protection — a holdover from the early days of Metro that has never been comprehensively reevaluated. Raftelis recommended that “100% of costs that fund services provided Metro-wide … should be allocated to the GSD.”
With the study finalized, Metro officials worried that delaying implementation of its recommendations could have legal ramifications, says deputy finance director Mary Jo Wiggins. Metro was on notice that USD property owners — who pay both GSD and USD taxes — were essentially double-paying for some services. If they didn’t act to correct this, those taxpayers could sue Metro for overcharging them. “Once we had the information, and we had a legal opinion that we needed to act on it,” says Wiggins, “we acted on it.”
Councilmember Jason Spain, a non-USD district councilmember from Bellevue, wishes he and his colleagues would have had more time to probe the final study. “I think there’s a conversation to be had about whether or not this is an appropriate thing to do, but even if it is, I think it’s being done too quickly, without appropriate conversations with the people who are going to be affected by it, and it just seems sort of half-baked at this point,” Spain says.
Wiggins says the changes have been under consideration for more than a year. An initial version of the study was released in September 2023, just as first-term councilmembers were being sworn in. According to Wiggins, another update came in March 2024.
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Spain doesn’t remember receiving the initial study. The first he heard of it, he says, was in April of this year, when the final study was sent to councilmembers — just days before Mayor Freddie O’Connell introduced his proposed budget to the council.
Spain also argues that, because the Nashville Fire Department spends most of its time responding to calls for service in the densely populated USD, USD residents should pay a premium.
“I don’t think that is a fair argument,” responds Budget and Finance Committee Chair Delishia Porterfield. “We don’t say that a firefighter isn’t going to show up because you live further out. It’s not a pay-to-play system.”
“You have to think about it as an insurance policy,” says Wiggins. “We all pay insurance and have no claims year after year, but you don’t get the luxury of saying, ‘How about I just pay for this when I actually need it?’”
In any case, Wiggins explains, USD residents are already paying their fair share. Because 77 percent of the county lives in the USD, the majority of property tax revenue comes from the USD. Asking the USD to take on even more of that cost isn’t legally defensible.
The council last week approved a budget that closes the gap between the GSD and USD tax rates. They set the GSD property tax rate for the upcoming fiscal year at $2.782 per $100 of assessed value. Property owners in the USD will pay an additional $0.032, down from the $0.332 premium they pay in the current fiscal year budget.
Councilmember Erin Evans, another non-USD councilmember, didn’t fight the reallocation of costs, but she’s fielded concerns from constituents about the impending changes. “I think, ultimately, people just want to make sure that they’re getting what they pay for,” Evans says. “It’s all about perceived value: What are we spending your money on, and what are you getting in return?”
