Revenues Running Short 

Mayor calls for city hiring freeze

Mayor calls for city hiring freeze

Citing less-than-projected sales-tax revenues, Mayor Phil Bredesen has directed his department heads to freeze all hiring of non-public safety personnel in Metro.

The mayor says his directive—the first of its kind since he took office in 1991—came earlier this week as a “precautionary measure” to address anemic sales-tax revenues. He says starting to deal with the issue now is his strategy to circumvent more “draconian” measures later. Specifically, Metro officials have discovered that sales-tax revenues for Metro’s previous fiscal year, which ended June 30, grew by just 3 percent, about two percentage points short of expectations. In dollars, the shortfall means Metro took in $6.6 million less than it was expecting to. About $4.4 million of it will hit the Metro school system, city officials say.

“I don’t want anybody to take it that the local economy is in the tank,” Bredesen says of the pallid revenues and his decision to declare a citywide hiring freeze. “It’s something every Metro mayor has done at some point. It’s the first time that I’ve done it.”

Bredesen points out that Nashville’s sales-tax revenues have, until recently, been growing annually by a rate of as much as 7.5 percent, a pace the mayor characterizes as “totally unsustainable.” In other words, he says, “rather than having an extraordinary year, we’re having an ordinary year.”

Bredesen says the hiring freeze potentially could last the entire fiscal year, which ends June 30, 1999. He says he’s notified officials at the Metro police and fire departments that their agencies aren’t “exempt” from the belt tightening but that positions necessary to public safety will continue to be filled.

The mayor attributes the weaker sales-tax revenue stream at least in part to the impotent summer tourism season in Nashville. Gaylord Entertainment’s closing of the Opryland theme park and the April tornadoes’ nationally publicized devastation of parts of the city are two factors frequently cited for the slow tourist season.

But Bredesen predicts the expected opening of the Opry Mills shopping and entertainment complex several years from now will be a “huge sales- tax supplier.”

The spending culture

This is not the first time during Bredesen’s tenure as mayor that the city’s resources have been stretched a little thin. But more typically, talk of Metro’s fiscal health under Bredesen has concentrated on his penchant for larger-scale capital projects, which are funded by property taxes, not by the city’s sales-tax revenue stream, which has been mostly vibrant under Bredesen’s watch.

Those expenditures have come to overshadow—and in some cases, replace—less glamorous projects such as infrastructure improvements.

Bredesen has long acknowledged that Metro has been spending more aggressively on such projects since he’s been mayor. In fact, spending more has been a part of his plan, as he told the Scene in an interview during the spring of last year.

“I’ve been very open about one thing: When I came into the mayor’s office, I felt there was a great imbalance between what we spent as operating money and what we spent as capital funds,” Bredesen said. “In the past, when we had an extra dollar, it always went to the operating side of the budget, and we tended to short the investments and capital things. The Municipal Auditorium was going down the tubes in terms of repair, we didn’t have a new arena like a lot of cities had, we didn’t have a new library like a lot of cities had.

“What we tended to do when we got an extra dollar was hire another public-works employee or another fire fighter, and that was kind of an old city-government style of running things.”

The mayor said there was “no question” that he “put the brake on some of the operating expenditures and put some money in some projects like arenas, like stadiums, like libraries, like school construction.” What’s more, Bredesen said he had “an active strategy to convert some of those operating monies into capital projects.”

Under Bredesen, the city has raised property taxes three times. In 1993, the city passed a 77-cent tax increase to fund a three-year pay-raise plan for Metro employees, construction of the arena, and sweeping capital improvements for Metro schools.

Then, in 1997, the Metro Council passed a scaled-down version of another of the mayor’s proposed tax increases. A 54-cent increase went to fund employee pay raises, a new downtown library currently under development, and more improvements for schools.

Then, in June of this year, the Metro Council passed a 12-cent tax increase to fund the controversial $206 million school desegregation plan that called for construction of new schools in strategic places around the city.

More than Dick Fulton or Bill Boner before him, Bredesen is a mayor whose administration can be described as progressive. But he has also been criticized for a tax-and-spend attitude. While other municipalities might take the approach of using increased revenues to fund modest capital projects or of letting revenues repay debt service on projects, Bredesen has primarily relied upon property taxes to fund large projects. Despite a booming economy, he has still demanded tax hikes.

But he has also maintained that Nashville is “a city with a very low tax rate,” and there are things like schools, libraries and stadia that have a lot to do with the future economic health of the city. What’s more, he has argued that Nashville is in a much healthier position today because the city has made some investments in projects, like an arena, which are generating tax revenues.

For a fairly long while, some in the community have advocated Metro government take a breather to ensure that it has a sound financial foundation. There is a sense that Metro government ought to eat everything that is now on its plate, rather than order up another entree.

In fact, all of the candidates planning to run in the August 1999 mayor’s race hold at least some form of the view that Nashville will need to slow down major spending for a term or two after Bredesen leaves office. Some of them even fear they may not be able to promise much more than sidewalk improvements and pot-hole repairing. There seems to be widespread agreement that, more than anything else, the next mayor will have to be a baby-sitter, assigned to keep things running smoothly but not given much chance to take credit for many projects of his own.

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