Fitch Ratings, a leading credit and bond rating agency headquartered in New York and London, does not like a referendum on the November 7 ballot that would require voter approval for future Metro Nashville real property tax increases.
In a statement released this morning, Fitch analysts warn that the ballot measure, if upheld as constitutional, "would further limit Metro's financial flexibility and could affect its rating.... Fitch rates Metro's general obligation (GO) bonds 'AA+, with a Negative Rating Outlook that reflects Metro's weakened financial position with reduced reserve levels, and continued spending pressures."
Fitch went on to state that because property tax revenues comprise more than half of Metro's general government revenues, restrictions on revenue-raising ability would "likely further erode financial strength."
Metro's Department of Law has stated that the amendment would likely be found unconstitutional if passed, because the Tennessee Constitution states that the authority to determine property tax rates is in the hands of the general assembly, not with voters. Regardless, Fitch Ratings says that it will be monitoring the results of the election and any ensuing legal challenges, which may have an impact on future rating evaluations.