June 30, 2005

Nashville "Wheel Tax" Increase May Not Be Legal

It has come to my attention that the $20 county car registraion fee increase passed by Nashville's Metro Council Monday night was not passed by the two-thirds majority required by state law.

However, Ben Cunningham of Tennessee Tax Revolt tells me that, apparently in order to both get around the 2/3rds requirement and to sidestep a provision of state law that allows citizens to reject a "wheel tax" increase via a petition drive and referendum, the council designated the $20 as some kind of secondary fee, not actually a wheel tax increase, even though it only comes due when you renew your car registration.

Hmmm... Here is the ordinance. It increases "the amount of the annual commercial vehicle regulatory license and the motor vehicle regulatory license" by $20 respectively.

, when you register your car and pay the wheel tax you get what everyone calls a "Metro Sticker.". Metro may call it a "Metro sticker," but even The Tennessean knows that's just a euphemism for "wheel tax." As the paper reported back on June 2:

Increasing the wheel tax would require either the General Assembly to authorize the change through a private act; Metro voters to back it in a referendum; or Metro Council to approve it twice by a two-thirds majority.

The ordinance increasing Nashville's wheel tax by $20 passed 26-10 with three abstentions and one member of the 40-member Metro Council not present on June 28 and by 22-3 with 11 abstentions and 3 not present on June 21.

Here is what the Tennessee Code says about wheel tax increases:

Sec. 5-8-102(c):

(c) Motor Vehicle Tax - Imposition.
(1) No resolution authorizing such motor vehicle privilege tax shall take effect unless it is approved by a two-thirds (2/3) vote of the county legislative body at two (2) consecutive, regularly scheduled meetings or unless it is approved by a majority of the number of qualified voters of the county voting in an election on the question of whether or not the tax should be levied.

Tennessee Code allows says that voters in a county can force a wheel tax increase to a referendum by gathering the signatures of registered voters on a petition amounting to ten percent of the votes cast in the county in the last gubernatorial election, within 30 days of final approval of such resolution by the county legislative body, then the county election commission shall call an election on the question of whether or not the tax should be levied in accordance with the provisions of this section.

It appears to me that Nashville's wheel tax increase was not legally passed - but if they evaded the provisions of state law by designating the wheel tax increase as something other than a wheel tax increase, well, that seems awfully fishy.

The $20 wheel tax increase is expected to raise about $9 million in new revenue for the city - a tiny fraction of Nashville's $1.44 billion budget. Metro Council and Nashville Mayor Bill Purcell ought to just cancel the wheel tax increase, as it appears not to have been legally passed.

If they don't, then some lawyer looking to make a name for himself among the rather large number of anti-tax voters in the Nashville area might want to look into it and see if there is grounds for a lawsuit to stop the wheel tax increase.

UPDATE: Metro councilman David Briley, in a comment posted over at PithInTheWind.com, says Nashville-Davidson County's wheel tax is exempt from that section of state law because its wheel tax was authorized years earlier by a "private act" passed by the state legislature. I find the argument unpersuasive as TCA 5-8-102 nowhere exempts any county from its provisions.

Briley says Metro Council's lawyer agreed with his view, that Nashville is exempt from TCA 5-8-102, but of course that opinion has not been tested in court.

There are two ways it could: First, a lawsuit challenging the higher wheel tax on the basis of the vote not meeting the 2/3rds requirement. And, second, if a petition drive gathered the necessary signatures for a referendum but the Council took the position that Nashville's wheel tax is exempt from the provisions of TCA 5-8-102, it would set the stage for one heck of an interesting legal battle.

By the way, there were 165,310 votes cast in Davidson County in the last gubernatorial election, so it would take 16,531 legitimate signatures of registered Davidson County voters to qualify for a referendum. In the next 30 days. That's 551 signatures a day. I can't sign the petition, but I work and if someone organizes the petition drive, I'll gather as many signatures as I can - and even make the petition available on my blog for downloading so people can sign it and send it in.

UPDATE: Briley, a lawyer as well as a member of the Metro Council, has posted more comments over at the Pith blog, noting that he did some research and found that it wasn't a private act that established the Metro sticker after all, but two court cases. Rutherford v. City of Nashville (1935) and City of Chattanooga v. Veatch (1957). Briley writes:

Essentially, the Court held that a vehicle tax is within the police power of the City. The Chattanooga case also held that a law of general application did not trump the City's police power in this respect. Same result, different logic. Sorry about any confusion.

You would think so - otherwise every county in Tennessee could raise its wheel tax without complying with TCA 5-8-102.

I'm thinking the best way to test this is for someone to organize a petition drive, gather the required number of signatures, and then sue the city of Nashville if Metro Council won't put the wheel tax to a referendum.

UPDATE: The debate on this issue over in the comments at PithInTheWind.com, linked above, has been very good, very instructive, with various contributors providing very good research. Don't miss it as the debate and commenting is still going on...