Mayor Freddie O'Connell Applauds Passage of Operating Budget

Mayor Freddie O'Connell tonight applauded the passage of the Fiscal Year 2027 operating budget which prioritizes affordability and puts the largest ever amount of local funding toward housing. The Mayor's recommended budget provided the foundation for the substitute ordinance which passed Metro Council overwhelmingly. Mayor O'Connell's proposed 22% grocery tax cut was also approved tonight by the body.

"More housing, better schools, higher employee pay, and tightening our spending in recognition of slowing growth all make a statement about our values. This budget puts the most money toward our biggest challenge, affordability, by making the largest investment in affordable housing in our city's history and by putting money back into the pockets of our people through a 22% cut to the local grocery tax. Lowering the grocery tax lets Nashvillians keep some of their hard-earned pay because feeding your family shouldn't be a luxury. 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 $9million back into the hands of our residents. I want to thank Chair Toombs, the Vice Mayor, and the Metro Council for their work on the budget and I want to thank the many Nashvillians who lent their voice to the process," said Mayor Freddie O'Connell. "This budget makes clear that this city is for all of us, and it supports our work to build a city where everyone belongs, can afford to live, and can find opportunity to grow."

Priorities emphasized in the mayor's budget include:

A More Affordable Nashville

Grocery Tax

Inflation is increasing costs for everything, including groceries. Mayor O'Connell proposed a 22% cut to local option sales tax on groceries as part of his work to address affordability in Nashville. Every Nashvillian shops for food and will benefit from lowering the cost of the groceries we all buy.

Housing

Housing is our biggest affordability challenge, and Metro's upcoming operating budget invests a historic amount toward the Unified Housing Strategy.

But a big number doesn't house anyone on its own. What matters is how Metro uses it.

The Barnes Affordable Housing Trust is one of the most effective tools Metro has for building the most affordable homes, especially homes for people earning the least - our neighbors making 30% of the area median income (AMI) or less. That's Nashvillians working full-time at minimum wage. The recommended operating budget pushes that work further with the largest General Fund investment ever in the Barnes Fund.

But we're also building new tools. For working people caught in the middle, the budget adds an Affordable Housing Loan Program that will support housing for people earning 60% AMI - which is about $62,000 a year for a family of three. That's service workers, preschool teachers, hairstylists, and medical assistants, for example. The people who build things and keep this city running are fighting to keep pace with growing housing costs. The Affordable Housing Loan Fund provides loans to make an affordable housing project work when private debt and equity can't cover the cost of building. Because these are loans, not grants, Metro can recycle the repayment dollars into future affordable housing projects. That frees the Barnes Fund to do what only it can do: reach deeper and build more for the neighbors who need it most.

With the Affordable Housing Loan Program, the budget funds the staff needed to build the standards and know-how necessary for an affordable housing program supported by bonds that will be far bigger than any other tool available.

The budget also funds programs already supporting other emergency housing needs - like Eviction Right to Counsel, home sharing, permanent supportive housing, rapid rehousing, payments in lieu of taxes, and other anti-displacement strategies.

This budget represents nearly a 150% increase in Metro's spending on housing, and the proof is already in front of us: our investment is paying off. Since launching the Unified Housing Strategy roughly 16 months ago, we've created or preserved more than 3,000 affordable homes. And now, we have the potential to build on that success with increased investment and more tools at our disposal.

Reliable government services

The future of Nashville is being built in classrooms around the city, and this budget continues our commitment to support our teachers and educators. While the state is shrinking its commitment to funding our schools, we've continued our commitment to fund pay increases for teachers and supports the safe implementation of new school start times.

Metro employees need to afford this city, too, and wages are a key part of affordability. The budget includes fully funding the pay plan approved by the Civil Service Commission. The combined across-the-board increase plus merit is expected to provide a total pay increase of 3.7% for most employees. With this budget, the minimum hourly rate for full-time entry-level jobs with Metro will increase to $22.50 per hour.

The Metro Public Health Department's (MPHD) Nashville Strong Babies program will receive an increase of $250,000 to support the successful Doula program. Now countywide, the Nashville Strong Babies program supports participants from pregnancy through the first 18 months of life. The MPHD budget also includes funding for Metro's partnership with the Mental Health Cooperative to provide crisis services for people experiencing a mental or behavioral health crisis through REACH, Partners-in-Care, and other programs.

Importantly, the budget reflects the economic realities of the local, state, and national economic environments. Locally, revenues into the city's general fund are flat and the budget tightens city spending. The FY2027 maintains healthy fund balances and strengthens financial reserves. These proactive safeguards allow the mayor to preserve operational stability, protect essential services, and position the government to respond effectively and responsibly to future economic uncertainties and fiscal pressures.

The FY2027 budget will take effect on July 1, 2027.