The more you look at Mayor Bill Purcell’s $237 million capital spending plan, the more startled you become at how much it includes.
There is $62 million for building and renovating schools, $30 million to build and repair roads and $20 million to repave sidewalks (one of the largest such expenditures, if not the largest, in the city’s history). There is $2 million to buy new garbage cans for people who live in the urban services district (which Nashville has never done before) and $2.1 million for new library books (a record). There is $5 million for the zoo (unheard of) and even $2.6 million allocated for improvements to roads, sidewalks and interchanges in The Gulch development along the south ends of 11th and 12th avenues (an unprecedented line item).
All this comes on the heels of last year’s $171 million capital spending plan, which included $55 million for schools, plus the renovations of the Metro courthouse and Howard School office campus.
But the question is whether Nashville can afford to do all this in the middle of a recession, as private-sector companies cut jobs and anemic consumer spending generates less sales tax revenue. At-large Metro Council member Leo Waters is one of many people who wonders. “When you look at the items that are in the budget, it is very difficult to argue with the need for them,” Waters says. “For example, it’s hard to argue with the idea that Hume-Fogg High School should get a new air conditioner and all the schools should get copiers. The real question is whether we have the bonding capacity to afford all this. And I’m not sure yet what the answer to that question is.”
Purcell says the answer is yes, claiming that the cost of ignoring needed improvements is greater than the cost of funding them. “This city has neglected its infrastructure for decades,” Purcell says. “I’m not just talking about things such as sidewalks and roads, which need work in almost every part of the county. But I’m also talking about basic things that a government does for its citizens, such as buying library books and improving parks.”
But the affordability question is a complex one with many moving parts. Since 20-year general obligation bonds would fund most of the $237 million capital plan, its passage probably would cost Metro’s taxpayers between $20 million and $25 million every year from now until 2022. At first glance, this might not seem problematic, given that Metro government just raised property taxes (and therefore its bonding capacity) and the city’s bond rating is higher than ever.
But it’s worth noting that the capital plan would raise Nashville’s bonded debt from about $1.2 billion to $1.4 billion at a time when sales tax and hotel-motel collections have been declining. Meanwhile, the state legislature, increasingly desperate for ways to balance the budget, is considering the idea of raiding funds that go to local governments. One of the most discussed proposals is to hijack revenue generated from the levy on investment income—known as the Hall Income Tax—that is then sent to local governments. That alone could cost Metro about $9 million a year.
Because of all this, Metro Council staff director Don Jones is nervous about the size of Purcell’s capital plan. “It has been a long time since Nashville had an economic downturn, and the long-standing concept that growth is going to cure everything and raise our tax base may not be valid,” Jones says. “During bad times like this, I would argue that we should be more selective about what we pay for.”
Jones also points out that council members have been hearing a lot of complaints from citizens who have recently received updated property tax bills. In other words, the citizenry may not be in the mood to applaud such liberal spending. “Because of the reappraisal and last [fiscal] year’s property tax increase, some people’s tax bills have gone up by as much as 50 percent,” Jones says.
But using logic reminiscent of Franklin Roosevelt, Metro finance director David Manning offers several arguments about why now is a good time for Metro to spend. “For one thing, we’ll get more competitive bids on all construction projects in an economic downturn than we would in a good time for the economy,” he says. “For another, we will get more for our money right now because interest rates are so low. The other thing is that we will also be pumping money into the economy at a time when the city really needs it.”
The real reason that the council probably will pass the capital plan has nothing to do with interest rates or demand-side theories about economic stimuli. Politicians love pork, and there is something in Purcell’s $237 million wish list for just about everyone. North Nashville would get a new $4.2 million police precinct. East Nashville and the Opryland area would get a new footbridge across the Cumberland River that will connect Shelby Bottoms to Two Rivers Park. The Crieve Hall area would receive a new $4.9 million elementary school. At least eight different Metro parks would see improvements, among them Centennial Park on West End Avenue, Beaman Park in northwest Davidson County and Hadley Park in North Nashville. Parents of young children are excited about funding for the zoo and the library.
Many Metro Council members say it’s easier to defend Purcell’s long list of small- and medium-sized projects than it was to defend huge initiatives undertaken by former Mayor Phil Bredesen, such as the arena, stadium and downtown library. “Many members were taken aback by the cost of the plan, but once they realized how many things were in the budget, they were just thrilled,” Vice Mayor Ronnie Steine says.
Despite the likelihood that the capital plan will pass, it has resulted in more scrutiny from the Metro Council. A year ago, there was very little public examination of Purcell’s $171 million capital plan.
This year, Council Budget and Finance Committee chairman Jim Shulman has scheduled six public hearings between Nov. 15 and 29 related to the mayoral proposals. “There is so much money and so many projects in the plan that many council members felt as if we needed more information,” Shulman says.
Shulman, former chief of staff for House Speaker Jimmy Naifeh, says the meetings don’t represent any attempt to replicate the long, tedious budget process at the legislature. But he does believe that the council wants to be better informed about how and when capital money is spent.
Shulman is one of many council members concerned that some of the projects funded in last year’s plan remain unfinished, such as school roof repairs. “The current council has been here for two years, and we are starting to question things more and more.”
Even if the council approves the capital plan, the experience of deliberate budget hearings for such grand expenditures may be an important one.
Meanwhile, the council is grappling with yet another weighty issue: Purcell’s plan to close the Nashville Thermal Transfer Plant and replace it with a new natural gas facility that would serve downtown. Unlike the capital plan, the proposal to eliminate thermal doesn’t carry support from all corners of the council.
“I’m generally comfortable with the [capital plan], because I believe that the mayor is in a better position to evaluate the city’s needs than I am,” says at-large Council member David Briley. “But I think that thermal is less of an infrastructure need than it is a public policy decision.”
