NoTax4Tracks, a new PAC founded to oppose Mayor Megan “Moonbeam” Barry’s $9 billion transit plan, came out blazing Tuesday, issuing a statement that the proposal will raise Music City’s sales tax to the highest levels in the nation.
Furthermore, the group cites urban planning and traffic study experts that say the costly proposal will not solve Nashville’s traffic challenges.
Last week, the Metro Council voted to place Mayor Barry’s tax increase plan before the voters of Nashville/Davidson County in a referendum to be held on May 1, just three and a half months from now.
Voters in Nashville/Davidson County can expect to see a vigorous battle play out in the news media, on social media sites, on the phone, and in person, as supporters and opponents of the $9 billion transit plan spend what could well be millions of dollars to compete for their votes in May.
The battle was clearly joined within minutes of the release of the NoTax4Tracks statement.
“Transit for Nashville, which is campaigning for Barry’s proposal, slammed the new PAC’s motives,” The Tennessean reported:
“The anti-transit group that has come out in opposition wants to do nothing to help Nashville’s growing traffic problems,” Transit for Nashville spokeswoman Kelly Brockman said. “Instead, they want to stifle it. Nashvillians want something now. They are tired of sitting in traffic wasting time out of their days.”
But NoTax4Tracks pushed back against that characterization.
“We waited to hear if the plan was workable. It’s not. We waited to see if the funding was fair. It’s not. We waited to see if the Metro Council would ask critical questions. They haven’t. So, the time to wait is over,” said NoTax4Tracks PAC supporters in a statement about the new group. “We must now say this is the wrong plan at the wrong time and people should vote no. Those who can least afford it will pay the highest sales tax in the nation for a plan that will not help them with traffic congestion.”
Joe Scarlett, the retired CEO of Tractor Supply Company, agreed, adding:
When you think congestion, you think of the interstates, Green Hills and downtown. You don’t think of a light rail train on Gallatin Pike. That’s why this plan needs to go back, be re-thought with new technologies and new ideas and redone. We agree, traffic congestion needs a plan, but not this plan. There does need to be a Plan B.
David Fox, who was defeated by Barry in a September 2015 runoff election to become Mayor of Nashville by a 55 percent to 45 percent margin, also weighed in on behalf of the NoTax4Tracks’ case against the proposed tax increase.
“I’ve been careful not to make any public comments since the election,” Fox told The Tennessean, adding:
But this plan is such a boondoggle that I felt as a taxpayer I should be willing to talk about it.
From 40,000 feet, the juice isn’t worth the squeeze here. That’s kind of the bottom line.
The NoTax4Tracks statement listed additional issues of concerns with the city’s plan:
- No Regional Financial Participation
- The city has adopted an “if we build it, they will come” strategy. Hope is not a strategy. One of the key issues that needs to be strengthened is regional buy in and participation.
- The city plan calls for $1.5 billion in federal funding will be used. How? The Federal Transit Administration (FTA) has clearly said its budget: “…includes no funding for new CIG projects, and thus project sponsors that do not yet have construction grant agreements acknowledge they are undertaking additional work at their own risk which may not receive CIG funding.” The FTA went even further and said that even though they are: “…continuing to accept and process project applications” for its grants, with the caveat that no money is guaranteed.” No money is guaranteed. So that means that only Davidson County residents will pay for a $9-billion plan. The cost just keeps going up.
- Tourism, with visitation and spending, has made Nashville a global brand, Music City. Tourism has been the economic engine that has made Nashville the “It” city. This plan will clog that engine. From the blasting of a tunnel to the 24/7 rumble of debris trucks downtown to the 20 percent small business tax increases, it will damage a world class lodging and tourism industry. The Music City brand will suffer.
The NoTax4Tracks website cites specific reasons why seniors, commuters, parents, and small businesses in Nashville/Davidson County should vote no on the transit plan referendum:
Increased sales taxes mean more financial strain for seniors. Of course, Nashville’s transit problems demand solutions, but we believe with better planning the solutions won’t take a toll on seniors with fixed incomes like this plan does.
This plan will burden commuters with massive construction for the next 10 years, higher vehicle prices with the sales tax increase, and even then, it will not solve our traffic problems. It also does not take into account the congestion on highways around Nashville. A solution for building light-rail in downtown Nashville is not a solution for all of Davidson County.
The current plan will take more than a decade to complete and generations to pay off. Cutting into tight family budgets and saddling our children with a childhood of construction and a future of high taxes is not fair. If it goes over budget, the plan could also eat away at precious taxpayer resources that fund education and other public services. We need a better plan at a reasonable price.
With four separate tax increases to pay for the current plan, small businesses will see both a reduction in business and an increase in business expenses. The tax increase will also shrink the tourism industry that many Nashvillians have come to rely on to provide for their families. We do not need to disrupt business and tourism for 10 or more years, building tunnels and tracks that will not solve our congestion problems.
Vanderbilt Associate Professor of Economics Malcom Getz – an early critic of the proposal – wrote an extensive, 20-page critique of the transit plan, working from the city’s own documents, as introduced, December 11.
Getz’s essay covers four key areas of failure: that transit does not reduce congestion, street railways slow with stops and transfers, car-hailing services and express lanes excel, and few who pay the sales tax get benefits.
The Vandy professor writes:
The [Transit Improvement Program] TIP report does not identify the primary beneficiaries of the transit improvement program. It does not consider measures of finance that would allow the primary beneficiaries of the program to bear more of its costs. An increase in the property tax in the Central Business Improvement District would be an example. Special property tax districts along the rail corridors would be another possibility. Instead, transit proponents propose tax reductions for real estate developments in the rail corridors through the Transit Oriented Development District legislation. These tax subsidies increase the share of Metro public services paid for by taxpayers who are not subsidized. That is to say, the principal beneficiaries will pay less for the transit improvement than people of similar circumstance who are distant from the railroads.
Understanding the transit taxes helps identify who gains and who pays. The TIP report (pp. 39-43) describes the four taxes that will pay for the transit initiative. A 44% increase in the local option sales pushes the rate from 2.25 to 3.25 percent of retail sales by 2023. These taxes will last for a long time. The sales tax will generate about $225M in 2023, a little less than 94% of the total transit tax revenue. The tax on the gross income of businesses, hotel fees, and rental car fees complete the total transit tax sources. The burden of these taxes falls primarily on local residents and local businesses.
Apart from the sales, rental car, and business tax increases contained in the City’s proposal, the hotel tax is what will put Nashville on the map:
The hotel tax increases from 6.0 percent to 6.375 percent by 2023. This tax will yield about $6M in 2023, a little less than three percent of the total transit tax revenue. Hotels in the convention business will bear the burden of both the added hotel and sales taxes. Professional convention managers solicit bids from several cities. Among cities able to offer the necessary services, the manager will choose a city with the lowest hotel room rate for a large block of rooms, inclusive of all taxes. Any increase in sales and hotel tax causes the hotels to accept a lower room rate net of taxes. In this setting, the hotels bear the tax through lower prices, not the conventioneers who pay the bills. Tourists are also quite sensitive to prices. Hotels and other businesses in the convention and tourism business will bear most of the burden of the hotel and sales taxes that appear on their bills. Nashville’s total of sales plus hotel tax will be 16.625% in 2023. Las Vegas has the highest rate in 2015 at 18%. In 2015, nineteen of 150 large cities in 2015 had total lodging tax rates above Nashville’s proposed rate.