Bob Mendes
At-Large Metro Councilmember Bob Mendes was not surprised by much of what he heard during last week’s three-hour-plus public hearing on Mayor David Briley’s proposed Metro budget.
“It was pretty reflective of the email traffic I’ve been getting for a couple weeks,” says Mendes. “A common thread, whether you were for or against, was fundamentally not understanding how we can be in a budget crunch when the city’s booming.”
Confounding as it may be, it’s true. After years of growth, positive press and aggressive self-congratulation, the city came into this year’s budget cycle facing a $34 million revenue shortfall. As a result, Mayor Briley’s budget proposal does not deliver on the cost-of-living pay increase Metro workers were promised and falls nearly $40 million short of the budget request made by Metro Nashville Public Schools. The cash shortage comes after the average Nashville voter’s trust in Metro government has suffered a series of blows.
Former Mayor Megan Barry’s resignation earlier this year amid a sex and ethics scandal was followed by the overwhelming failure of the transit plan she’d proposed — one that was apparently out of step with what Nashvillians wanted and how much they were willing to pay for it. Around those events were the small sort of controversies that add up: Barry’s quickly abandoned plan to end inpatient care at Metro General Hospital, announced the same week that the Metro Council approved a $275 million soccer stadium plan; the proposed Cloud Hill development, a sweetheart deal for well-connected developers that Barry also abandoned; and Briley’s recent failed attempt to resurrect the downtown flood-wall proposal.
Speaking to the Scene last month, Briley pointed to a number of factors that contributed to the tight budget — a loss of state revenue, an uptick in debt-service obligations, miscalculations related to last year’s countywide reappraisal, and the lowest property tax rate in Metro history. Metro is legally prohibited from making money off the reappraisal, meaning if property values go up, the tax rate is adjusted down to keep revenue the same. As Mendes emphasizes, the city’s mayors have historically proposed increasing the property tax rate alongside the reappraisal every four years, to capture the growth in property values. But Karl Dean, whose tenure overlapped with the Great Recession, did not keep up that practice. Nor did Barry, and Briley has also ruled out using a tax increase to cover this year’s shortfall.
But that’s what Mendes is proposing, although he acknowledges that Metro being in a budget crisis at all has some constituents balking at the idea of giving the city government more money. With the public backing of several other council members, he’s sponsoring an amendment to the mayor’s budget proposal that would raise the combined property tax rate by 50 cents, from $3.155 to $3.655 per $100. The tax hike would generate around $150 million in revenue, which would more than cover pay raises and the MNPS request. The Briley administration opposes the Mendes plan.
“Honestly, I don’t understand where they’re coming from,” Mendes tells the Scene. “I feel like the budget this year is built on quicksand.”
In a lengthy frequently-asked-questions document he’s been updating in recent weeks, Mendes makes his case. Using Metro’s own projections, he calculates $280 million in new expenses over the next three years and just $130 million in new revenue — creating a $150 million gap he wants to cover with a property tax increase. In the document, he notes that his proposed 50-cent increase would be the smallest ever. He also argues that corporate tax breaks handed out as part of economic development deals, however irritating they may be to constituents, do not account for the shortfall Metro will face over the next three years. And that the cuts in spending won’t get the city there either.
Councilmember Tanaka Vercher, who chairs the council’s Budget and Finance Committee, tells the Scene that a property tax rate adjustment is “absolutely” needed, but now is not the right time. She says taxpayers expressed their opposition to raising taxes when they rejected the transit plan. In a letter sent to Vercher earlier this week, Briley emphasized the need to avoid increasing the burden on Nashville’s most vulnerable citizens, and she echoes his statements.
“We already have an affordability crisis,” Vercher says. “We need to make sure that we’re intentional and making sure that we’re not creating an environment where it furthers gentrified neighborhoods, and we end up displacing more people.”
Her proposed substitute budget, she adds, will not include a property tax increase.
A final vote on the budget is coming June 19; with hours spent on public hearings and committee work sessions, Mendes says the council will have to choose one of two paths: Find a way to squeeze a 1 or 2 percent pay raise into this year’s budget and worry about the looming revenue shortage next year, or raise taxes now. Either way, he says, a tax increase is coming soon.
How quickly Metro can regain the public’s trust is less clear.
