Mayor’s Proposed Budget Sparks Debate Over Raising Taxes

Mayor David BrileyPhoto: Daniel Meigs

Mayor David Briley’s proposed budget for the upcoming fiscal year is a $2.3 billion spending plan — 4.55 percent bigger than last year’s. But one of the relatively small building blocks of that budget is likely to be at the center of the discussion as the Metro Council considers the plan in the coming weeks. 

The newly unveiled budget proposal — rolled out in conjunction with the mayor’s State of Metro address on April 30 — draws on $41.5 million in nonrecurring revenue. That figure reflects expected proceeds from two large deals emerging from the Briley administration in the past month: the outsourcing of management and enforcement for on-street parking (slated to bring in $30 million up front), and the sale of the city’s downtown energy system (which is supposed to contribute $11.5 million in revenue for the upcoming fiscal year). 

Both deals — neither of which is finalized — would generate additional revenue in years to come. The city’s 30-year contract with LAZ Parking would bring in $325 million over 30 years, for instance. But while that deal puts $30 million in Metro’s coffers this year, it would generate significantly less in the years to come. 

In other words, Metro is relying on money this year that won’t be there next year. It’s a strategy that was also used a year ago for a budget that At-Large Councilmember Bob Mendes said was “built on quicksand.” To his mind, it hasn’t worked, and the mayor’s proposed budget attempts to do the same thing again.

“I don’t think it’s responsible the way last year’s budget was done, or this year’s budget, and last year is useful context,” Mendes tells the Scene. “Last year’s budget, the year we’re wrapping up right now, had $15 million built in from the sale of the parking enforcement rights, and literally Tuesday we’ve got legislation that would give permission to hit the savings account for 15 million bucks to make up for the fact that we didn’t get that money this fiscal year. So we see live before us the sale didn’t happen, so we’re hitting savings. And now we’re going to do the same thing again next year.”

Mendes has two essential issues with this approach to the budget. First, as the above example illustrates, a planned sale might not go as expected, or it might not go through at all, leaving a hole in the budget. Second, even if everything does go as planned, the city will be looking for a way to make up for the gap left when a onetime infusion of cash runs out. If city officials simply use another onetime sale to fill that gap, it’s basically like using one credit card to pay off another. 

Citing those concerns, and noting that recent mayors had gotten out of the habit of raising property taxes every four years alongside the property reappraisal, Mendes proposed a property tax hike last year. It would have generated around $150 million in revenue. It nearly passed, too, but Council President Pro Tempore Sheri Weiner broke a 19-19 tie to defeat it. 

Briley’s proposed budget does not include a property tax increase, but Mendes may well make a similar proposal this year. 

“I have not fully decided, because I’ve seen the [Metro Finance] PowerPoint, and I haven’t gotten through the actual budget ordinance,” he says. “I do think it is likely that I attempt to pursue that again in a currently unknown amount.”

If he does, Mendes is likely to have an opponent, once again, in Councilmember Tanaka Vercher, chair of the Budget and Finance Committee. 

Although Vercher says she will have a substitute budget proposal with some proposed changes, she largely defends Briley’s proposed budget. 

The use of nonrecurring revenues in a budget is not unprecedented, says Vercher, and the parking deal has been a part of discussions for the past two years. When it comes to proposed funding for Metro Nashville Public Schools — which once again falls far short of what the district requested — Vercher points out that Metro’s funding has continued to increase even as enrollment has declined. State funding, on the other hand, has not kept pace. 

“I think what citizens want to see is that their government is fiscally responsible with their tax dollars,” Vercher says. “It’s easy to raise taxes. That’s easy. But to really go in and do a deep dive of the budget and identify inefficiencies and where savings are, those are the real challenges. All while saying you want to maintain your level of personnel, you want to maintain your level of services, all while the city is continuing to grow.”

In a post on his blog summarizing recent efforts to find savings throughout the Metro government, Mendes calls the idea that “belt-tightening” alone could fix Metro’s budget struggles “a myth.” 

“Last year, the numbers didn’t lie,” he writes. “There was no reasonable way to cut enough expenses to pay all the bills of a growing city. The Mayor wanted to give it a try anyway. But, now that we know chopping $30 million in expenses does not fix the city’s budget, I hope we can get focused on the revenue side instead.”

As she did last year, though, Vercher sounds skeptical that benefits of raising taxes outweigh the potential consequences.  

“One of the challenges that we have — and it’s a good challenge to have — we’re growing, but we’re growing at such a rapid rate that the city isn’t affordable,” she says. “So which do you put first? Do you try to get affordability under control, do you try to get your affordable housing stock up to allow people that can’t afford it now, then you raise taxes and are they back to where they were? I wish it was really simple. But it’s not.”