How Nashville Mayor John Cooper’s budget proposal could play out as it heads before Metro Council – The Tennessean
It’s a debate worth about $2.44 billion and involves what could be one of the largest property tax increases in Nashville’s history.
With nearly 700 pages of budget documents now in their hands, Metro Council members are quickly sifting through details as they start up department budget hearings Monday and face a deadline to file any challenges to Mayor John Cooper’s budget on Wednesday.
Cooper’s $2.4 billion budget proposal includes deep cuts and a nearly 32% property tax increase to help offset a precipitous drop in revenue from the COVID-19 pandemic. He has called it a “crisis budget.”
The city is projected to lose $470 million in revenue over the next 16 months, including more than $200 million in the next fiscal year, which starts July 1.
Now, it’s the 40-member council’s turn to put its stamp on Cooper’s spending plan. And like last year, some council members already are vowing to propose alternatives, a move that could lead to fierce debate about the city’s priorities.
Some say they will push for a smaller tax increase while others worry about asking Nashvillians to pay more as they face their own uncertain economic future.
Cooper spokesperson Chris Song said administration officials will work “closely” with council members to get the budget passed.
“Mayor Cooper presented a balanced budget that strikes the right balance between cuts and a revenue increase required to get our city through this time of historic challenges,” Song said
Cooper, who eschewed a property tax increase two years in a row, stands by his past votes.
“In the last two budget cycles, property tax hikes were considered before we explored every possible opportunity for new revenue sources and management savings,” Song said. “While we’ve had a need for better fiscal responsibility in Metro for some time, our current budget situation has forced us to do exactly that.”.
Cooper’s proposal calls for a $1 property tax increase, which would bring the rate to $4.155 per $100 of assessed value in the city’s more urban areas. Those with a home appraised at $250,000 would pay about $625 more per year under Cooper’s proposal.
Council looks to veteran members
Last year, council members put forth multiple budgets proposals of their own, including two with property tax increases. Former Mayor David Briley lobbied against these alternative budgets and threatened to veto a property tax increase if it passed without two-thirds support.
Ultimately, the council rejected by one vote a tax hike and Briley’s budget was adopted.
Half of the current council was not around for last year’s budget battle and this will be their first encounter with Metro’s budget. Many say they are largely looking to veteran council members for direction, specifically budget chair and At-large Council member Bob Mendes and Council member Tanaka Vercher, a former budget chair.
Mendes, who for two years in a row was among the main backers of a tax increase, told The Tennessean on Wednesday he was still deciding he would submit an alternative budget, feeling strongly it is the wrong time to have a political fight when the council can’t fully engage the public because of the coronavirus pandemic.
“If the mayor’s budget is within a country of a mile, that is OK with me,” Mendes said.
“You can’t have a plan for six months from now. I’m sorry,” he said, saying revenue projections are almost certainty wrong at this time.
Mendes and budget committee vice chair Council member Kyotze Toombs put months into preparing for an upcoming spending plan, hosting community meetings in all corners of the county.
The best thing for the city, Mendes said, would be to commit to the public that they will reassess the city’s financial outlook in a couple of months, before property tax bills go out in October.
On Saturday night, Mendes posted on his blog he was working on a substitute budget, as he has done for the past two years.
“As I type this, I have less than 4 days left to submit whatever I’m going to submit,” he wrote. “Right now, I haven’t made a decision about what I will do … I wonder whether ‘continuity of essential services’ is enough of a vision to base a $2+ billion budget on.”
He has concerns, he told the Tennessean, listing Metro’s employee pay plan as the central aspect of the mayor’s plan he’s against.
The city is looking, once again, to freeze employee pay, including step increases and a cost-of-living adjustment. The Metro Civil Service Commission, with the input of local unions, is recommending the council allow step increases and upgrades to job classifications for employees in 911 Emergency Communications, a department with high vacancies due to high employee turnover.
At-large Council member Steve Glover, who is vowing to put forth his own budget proposal, hopes to find a way to free up money for the pay plan.
He said he will propose a low tax increase that is “nowhere near” the steep jump called for by Cooper, a move he pushed unsuccessfully last year.
“None of my people want it,” he said, referencing like-minded conservative and moderate residents. “They may be OK with something much less and temporary.”
He said he is unsure yet how he’ll balance more money for employee pay while significantly lowering the proposed rate increase.
“This is a complicated bowl of spaghetti here,” Glover said. “Cuts will have to made that all sections of Nashville can survive with.”
But Glover said if the council can’t come up with a “team budget,” he runs the risk of Cooper’s budget getting adopted be default.
Council member Colby Sledge, expressed similar sentiments about members disagreeing on budget details.
“Ideally we get a consensus budget with the administration,” he said.
Others already at work on alternatives
Some council members are already preparing to work with different groups on the Metro Council to craft an alternative to Cooper’s proposal.
Council member Emily Benedict, a member of the budget committee, said she is still exploring the option of submitting her own budget.
If she does, she will work with others in the five-person LGBTQ caucus to shape it.
“I think (Cooper’s) budget lacks the right priorities and therefor we may need to do more than just a dollar (increase),” Benedict told The Tennessean.
She said she is disappointed to see Cooper’s budget doesn’t include the $5 million he cut from the Barnes Fund for Affordable Housing earlier this year, with the promise to restore the funds at a later time.
She hopes to find the money to replace those funds and also said she sees some opportunities to move funds around to invest more in social services — with needs for those services only increasing with a record amount of people filing unemployment claims.
“We’ve talked about the budget being a moral document. We need to make sure it focuses on our people and that we are putting people ahead of profits,” Benedict said. “We’ve got to take a creative scalpel to the budget to find ways by engaging with the community, nonprofits and social organizations and the business community,” she said.
Cooper’s budget proposal calls for a reduction by 50% in economic incentive grants, including for six companies, to save $1.2 million. Though it might be unlikely, she wonders if the city could explore potentially cutting all businesses incentives to the corporations.
“I know they’re doing a lot for the community and their employees, but could they allow us to skip a year?” Benedict said
Meanwhile, for its first time, Metro’s minority caucus has established its own budget subcommittee with Vercher leading the efforts.
She did not respond to a request for comment but caucus chair and At-large Council member Sharon Hurt said driving motivation of the budget group was to ensure that new members in the caucus are given a better understanding of the budget process and provided an active role in the conversation.
“We also want to make sure that we look at budget with an equity lens, so that it benefits all of Nashville and not just individuals,” Hurt said.
She said she believes the caucus will put together a substitute budget but said it was too early to say for certain and speak on behalf of other members.
Hurt, who has supported a tax increase the past two years, said she wants to see Metro deliver on Metro pay and also find more money for the school district so that mid-year raises can be maintained next year.
Reduce burden on residents, new council member says
“We’re going to increase property taxes. There’s no way around it,” said At-large Council member Zulfat Suara, a first-term council member. “Let’s make sure it’s not higher. For me, it has to be lower. This is not the time to go to the max. This is the time to see if we can reduce that burden on people.”
Though it is a hard decision, she said she understands why they can’t give Metro employee raises. A priority for her, she said, is that there are no layoffs, something Cooper has said could happen without the tax increase.
Suara, who intends to work with the minority caucus, said there parts of Cooper’s budget that are not equitable, highlighting the end of Nashville Education Community, a program that offers hundreds of free or affordable classes ranging in technology, hobbies or helping residents develop a professional skill.
But she made clear she knows Cooper and his staff had to make tough choices.
Suara said she’s looking to focus on how the city can find more revenue options. There’s not enough left to cut.
Options she and others want to explore include whether a smaller amount could go into reserves than the $100 million Cooper proposed, at least for an emergency period, and municipal bond buying program the Federal Reserve expanded as part of its efforts to keep money flowing for cash-strapped local and state governments.
As part of its Municipal Liquidity Facility, the fed is buying up to $500 billion worth of state and local government bonds. Initially only states and cities with populations exceeding 2 million residents qualified so Metro and other localities hoped the state could participate on behalf of cities and counties. However, Comptroller Justin Wilson said it was not an option currently within Tennessee Law and would require legislative action before it could be considered.
But then, just a day before Cooper presented his budget, the threshold was lowered and Metro qualified.
Deputy Finance Director Mary Jo Wiggins told The Tennessean the finance department will focus on the potential impact of using short-term financing over the next few months.
The program, which expires on Dec. 31, would be a 0% interest bridge loan the city would have to repay in three years.
“It’s not ideal when we talk about borrowing,” Zulfat said. “It’s not the first place we want to go. But when you have a recession, you have to put the money back in the system. For me, it provides an outlet to not put all the 32% (increase in property tax) on residents.”
Sledge said the program would give the city breathing room.
“The importance if doing this is not to just borrow our way out of this,” he said. “But it gives us time. Time to see how the economy will recover and what revenues look like into the next year. That’s what we don’t have right now, time.”
Those who are skeptical of the program say the more Metro borrows, the more cuts the city has to make in the budget. In good practice, the city would have to set aside money this year, and each year after, in anticipation of paying the federal government back.
As for a possible reduction for city reserves, the comptroller was hesitant to say if the amount in savings would have an impact on his decision to approve Metro’s budget, without a complete understanding of the budget.
“But good squirrel saves some nuts for winter. And you don’t want to be a squirrel with no nuts,” Wilson said.
Council members and the public are still waiting for more information from the Cooper administration on how the nearly $121 million federal stimulus package Nashville received will be spent.
With the funds something with strings attached — it must be spent on COVID-19 related expenses — it’s not likely it would help the city’s operating budget. However, it could be spent to blunt the impact of a tax increase.
A coalition of community groups and unions have called on the city to spent a portion to provide relief for renters and small business owners. Mendes has formally requested Cooper provide more information on how the money will be allocated.
The finance department did not respond to a request for an update on how the federal bounty will be spent.
Yihyun Jeong covers politics in Nashville for USA TODAY NETWORK – TENNESSEE. Reach her at yjeong@tennessean.com and follow her on Twitter @yihyun_jeong.
Published 1:00 PM EDT May 10, 2020
