Mayor Freddie O’Connell lauded the Metropolitan Council’s approval of the Fiscal Year 2027 operating budget Tuesday night, highlighting a half-cent reduction in the local grocery tax and the largest-ever local investment in affordable housing.
The $3.85 billion budget, which takes effect July 1, 2027, trims the local option sales tax on groceries from 2.25 percent to 1.75 percent. The move is expected to return approximately $9 million to taxpayers.
“Lowering the grocery tax lets Nashvillians keep some of their hard-earned pay because feeding your family shouldn’t be a luxury,” Mayor O’Connell said in a statement. “Cutting the local grocery tax by 22% at a time when we’re all paying more for everything because of inflation is the right thing to do for Nashvillians and with tonight’s vote, we put $9 million back into the hands of our residents.”
However, NewsChannel5 noted that for an average family of four spending about $1,200 per month on groceries, the half-cent reduction is projected to save roughly $6 per month, or $72 per year.
That equates to approximately $1.38 per weekly shopping trip.
The grocery tax cut arrives on the heels of significant property tax hikes. In 2025, Metro raised the tax rate by 26% in the Urban Services District and 39 percent in the General Services District, contributing to substantially higher bills even as property values rose.
More than 300 Nashville business owners, organized in the Nashville Property Tax Coalition, have warned that the increases are pushing many operations to the brink. Coalition leaders estimate over 100 local businesses could close within the next two years, citing examples like Acme Feed & Seed on Broadway, where annual taxes reportedly jumped from around $129,000 to nearly $600,000. Other closures and relocations have been reported along corridors like Gallatin Pike and in neighborhoods such as 12 South.
Mayor O’Connell’s comments on the business concerns have been described by critics as tone-deaf. In response to Acme Feed & Seed’s situation, he said, “It’s not up to me whether he keeps that business open. The market evolves. New businesses start even as beloved old businesses close.” He has also emphasized rising property values as a positive factor while noting his office is exploring limited relief options within state law constraints.
The approved budget also includes proposed grants totaling nearly $1.5 million for two nonprofits: approximately $735,000 to the Tennessee Immigrant and Refugee Rights Coalition (TIRRC) and $718,000 to Tennessee Justice for Our Neighbors (TNJFON). These continue prior funding for “legal and community services,” including services tailored to benefit illegal aliens residing in the city.
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Christina Botteri is the Executive Editor of The Tennessee Star and The Star News Network. Follow her on X at @christinakb.
Photo “Grocery Shopping” by Liz West CC2.0
