Gov. Bill Lee’s budget plan enables the Tennessee Titans to start collecting $2 million in sales tax revenue through Metro Nashville to go toward Nissan Stadium upgrades, which are part of a broader redevelopment plan along the Cumberland River.
The governor released his $42.6 budget and supplemental spending proposal today, including a $100 million two-week sales tax holiday on groceries and restaurants and elimination of $100 from the professional privilege tax while paving the way for tax relief on the Tennessee Titans for a stadium project.
State Sen. Brenda Gilmore, a Nashville Democrat who co-sponsored the Titans tax legislation with Senate Majority Leader Jack Johnson, a Franklin Republican, called the move a good investment.
“I think by continuing to invest in the Titans, we’re continuing to invest in Davidson County and the state of Tennessee, because visitors will be coming from everywhere, out of state, and bringing those revenue dollars to Tennessee,” Gilmore said.
The Titans have a long-range marketing plan on the East Bank for housing, restaurants, retail, green space and office buildings as well as stadium improvements. It is designed to create jobs and generate millions in tax revenue to eliminate the city’s financial burden in its lease with the team.
The tax revenue, which will be funneled through the Metro Nashville Sports Authority, should lay the “foundation” for that vision, Gilmore said.
The Titans called the legislation and pending project a “great collaboration” between several stakeholders and said they continue looking forward to working with the Lee Administration, House and Senate as the legislation is considered. It has not been taken up in committee.
“As our discussions regarding the future continue, there are many important pieces of the plan that will move our vision forward to create a first-class, community-minded stadium and surrounding campus,” the Titans said in a statement. “The legislation currently pending before the Tennessee General Assembly is one of those pieces. It would place Nissan Stadium on the same footing as the state’s other professional sports venues that have similar arrangements, allowing for sales tax revenue generated only by visitors to the stadium and the stadium campus to be used to fund building improvements, maintenance and needed repair.
The Titans’ lease with Metro Nashville provides for the city to pay for 100% of maintenance and repairs to match those of other NFL stadiums, and that debt has been building up the past few years.
The proposal allows the team to keep all or a portion of the sales tax generated in and around the stadium to put toward debt or stadium upkeep.
The Titans funding stems from an extension of an original deferred sales tax agreement and shifts $1.8 million from fiscal 2021-22 through fiscal 2028-29 plus $5.4 million annually beginning in fiscal 2029-30 from a special state account to the Metro Nashville Sports Authority, instead of to a private entity. The money in the special account is currently being used to repay sports authority debt.
The team wants to be able to keep sales tax revenue through the sports authority and gain control over development in the parking lot, with the ability to pay for construction projects through new sales tax.
Monica Fawknotson, executive director of the Metro Nashville Sports Authority, said Tuesday sales tax revenue is redirected to all of the authority’s sports venues, except Nissan Stadium, and noted this measure would be “tremendously helpful.”
The Titans have not revealed the details of their development plan, she said, calling it “conceptual.” Yet Nissan Stadium is more than 20 years old and it is clear “major renovations are needed for that facility,” Fawknotson said.
“So how do you accomplish that in a way that doesn’t cost taxpayers? There’s a plan, and at the right time the Titans will come to the sports authority and share the plan. That has not happened yet,” she added.
Lee’s supplemental budget plan puts $580 million toward what he called “strategic long-term” projects designed to steer the state back to pre-pandemic priorities.
“I’m especially proud to provide tax cuts to get money back to Tennesseans to encourage them to frequent industries that have been disproportionately and negatively impacted this year,” Lee said in a statement.
The state would offer a two-week sales tax holiday on groceries costing $25 million and a similar break on restaurants and all prepared food costing $75 million.
Considering the amount of federal money injected into the state, Democrats believe the governor should have done more to expand Medicaid to serve hundreds of thousands of people caught between TennCare and the Affordable Care Act.
The state had $2.5 billion in recurring and non-recurring revenue available for the supplemental budget and $530 million for the supplemental budget.
The governor’s plan includes $250 million to set up a K-12 mental health trust fund, which is expected to generate about $6 million to $10 million annually, according to Finance and Administration Commissioner Butch Eley.
The supplemental budget proposal puts $79.4 million toward eliminating a waiting list for students at Tennessee College of Applied Technology campuses; $55 million in Fast Track grants to prospective companies, bringing that total to $150 million; and $500,000 for a firearms safety program, which is dubbed as a public announcement.
The state will maintain a $200 million investment in rural broadband, as well as a $200 million expense for local governments. But it will postpone the start of that local funding until January 2022 to review federal funds and adjust state guidelines.
Gilmore said she supports much of the governor’s budget but said she wishes the state could do more for people still hurting from the economic shutdown of 2020 caused by the COVID-19 pandemic.
Instead of putting another $50 million into the state’s rainy day fund and bringing it up to $1.55 billion, Gilmore said the state should spend that money to help people stay in their homes, rather than potentially filing for bankruptcy because of ongoing problems from last year’s financial downturn.
Gilmore supported the reduction in the professional privilege tax, which will cut it from $400 to $300, an expense of $16.9 million to the state. The Democrat said she has heard numerous Nashville constituents say they support the tax break, but she also had concerns because it will give out-of-state professionals a reduction as well.
The governor’s supplemental budget also contains $2 million to help “underserved” students at Tennessee State University. Ninety percent of students there are the first in their families to attend a university.
For that program, the governor is putting in $4 million to increase Agriculture Extension agents at TSU and the University of Tennessee. A state report released last week showed the state had shorted TSU anywhere from $150 million to $544 million since 1956 in land grant funds.