Dean’s Dilemma 

Mayor ducks money issue in his first State of Metro speech

Mayor Karl Dean gave his first State of Metro speech this week during a happy innocent season of his public life that he’ll remember nostalgically.
Mayor Karl Dean gave his first State of Metro speech this week during a happy innocent season of his public life that he’ll remember nostalgically. Dean is ordering 200 layoffs, whacking department budgets by up to 10 percent and increasing school funding only by raiding the failing district’s savings account. Good times.

But at least he’s managed to maintain his image as a different kind of politician (i.e., an honest one) and hasn’t alienated voters yet by breaking any of his many election campaign promises. Wait ’til next year.

According to the almost universal opinion of those familiar with city finances, next year Dean will either (a) have to raise property taxes, thus breaking his promise not to do that or (b) “cut the living daylights out of the budget,” as one observer puts it, thus breaking various promises to improve schools, public safety, public transportation, etc.

Without a property tax hike sometime in the near future, at-large Metro Council member Charlie Tygard, for one, is predicting “more layoffs and massive cuts in services.”

Already, officials in the mayor’s office have talked privately about the possibility of raising the tax rate in 2009. That’s when most property values will go up in a countywide reappraisal. By state law, the tax rate will then be lowered automatically so there’s no net increase in city revenue.

Administration officials say that at that point they might ask the Metro Council to raise the tax back to its current rate to bring in more money. That can be done, everyone agrees, without violating the new anti-tax Metro Charter amendment that won 77 percent of the vote when it was on the ballot in 2006. The amendment caps the property tax at its current rate and requires voter approval for any increases above that level.

“We’ll cross that hurdle next year and, if we think it’s necessary [to ask for a tax hike], then we would do so,” Metro finance director Rich Riebeling tells the Scene.

So much for campaign promises. Dean wasn’t as audacious as Bob Clement, the desperate political hack who nearly won last year’s election by swearing off new taxes and promising the moon in services. But Dean made his fair share of paint-himself-into-a-corner statements. To wit: “I oppose an increase in property taxes. I have said so repeatedly, and Bob Clement knows it. I will not pass a property tax increase.”

Apparently that’s no longer operative as a reflection of Dean’s view on this topic. If only it were that simple for Dean—he raises property taxes, takes a little political heat for breaking a promise but brings in enough new revenue to meet the city’s needs for the rest of his first term. By the time he runs for reelection, voters will have forgotten all about it. Here’s the problem: If after next year’s reappraisal Dean raises the property tax only back to its current rate, it won’t end the city’s immediate difficulties.

With housing prices falling, the reappraisal might not increase property values that much overall, which means a tax increase wouldn’t generate that much new money. Even in robust economic times, reappraisals don’t raise enough to allow for pay raises for firefighters, police offices, schoolteachers or even for modest improvements in Metro’s operations. That’s why every Nashville mayor at least since Dick Fulton in 1981 has raised taxes like clockwork every four years. These mayors weren’t all tax-happy big spenders, were they?

“Is it feasible to fund basic budget requirements, pay for a reasonable [Metro employee] pay plan and make other program enhancements without any tax increase?” asked former Mayor Bill Purcell’s finance director, David Manning, in a memo to the new administration.

It was a rhetorical question. “No previous administration and council have been able to provide for the needs of the city without also increasing property tax rates,” Manning went on to point out.

So then, what are Dean’s choices? He could seek a bigger tax increase, but that presents its own set of complications. Under the aforementioned charter amendment, that would take voter approval in a referendum, which is problematic at best. It would require a major campaign to persuade a skeptical public of the need for higher taxes, which would probably fail, especially if the economy remains weak next year.

Or Dean could go to court to challenge the amendment. In an opinion during his time as Purcell’s law director, Dean said he thought the amendment was an unconstitutional delegation of the Metro Council’s authority. The problem with a court challenge, though, is that it breaks another of Dean’s promises. During the mayoral campaign, here’s what Dean said about that:

“The charter has now been amended, and my position would be that’s the law right now.… It’s what the people passed, and I will honor that. I have no plans to challenge it. I have no intention to challenge it.”

To this point, Dean has pretended not to understand the troubles that lie ahead. (Or maybe he’s naive. Over drinks during the campaign, one Dean adviser griped to Scene staffers, “We’re talking about a candidate with about as much political sense as this beer mug.”)

At Glencliff High School during one of his town meetings last month, Dean actually said this: “The stars have sort of aligned right now in our city where we can make an investment in our schools.” And this: “If we plan for some tight years, we’re going to be fine.”

In his State of Metro speech Tuesday, he suggested “smart fiscal management” is all that’s needed. “Although times are tight,” he said, “we know that will not always be the case.”

Really? True, Dean’s first budget cuts haven’t caused much anguish. Likely few, if any, of the workers targeted for layoffs will wind up on the street; almost all of them will fill vacant positions elsewhere in the government. The transit authority is probably going to cut bus routes and raise fares, and public works won’t make quite as many trips into your neighborhood to chop up your fallen tree limbs. Otherwise, the public won’t much notice.

But the mayor is fooling himself—and the public—if he thinks this budget year is as hard as it’s going to get. This is the easy part.

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