Month: November 2019

Body worn cameras — what’s the status?

There is confusion about the status of deploying body worn cameras in Nashville. Samantha Max at WPLN had a good story earlier this week that lays out the history of delays. Other media also have reported extensively about the evolving time line and cost. Before I get into my perspective about what has happened, I should explain some context for my perspective.

The context

The information I am relying on has been gathered over the last few years. It comes from some who are new to government, and many who have been in government through three or more mayors. It comes from multiple departments. I don’t think I am relying on any one person for any information I lay out today.

My purpose in writing this is not to assign blame. I have guesses about the (mostly good) personal motivations of the individuals involved, but that doesn’t matter. What matters is moving forward. And we’ve reached the point where I don’t think the government or the public will be able to effectively move forward on body cameras without a broad understanding about what has happened.

While I don’t seek to assign blame, some will want to draw conclusions about blame. I am trying my hardest to not worry about the intent of anyone involved. First, to move forward, the city needs a process that is bigger and better than any one person’s intent. Second, I have a hard time looking into another person’s soul to decide intent. I’ll use a sports metaphor to make this point.

If there is a point guard in basketball who shoots a lot more than he passes, the team will almost always be bad. From the outside, it looks like an intent to hurt the team. And sometimes, the point guard is selfish and doesn’t care much about the team. But other times, the point guard genuinely thinks that every shot is an awesome shot and he just can’t help himself but to launch the ball without passing every time down the court. For me, when I see a point guard doing that, I’m not sure I care whether he’s fundamentally a jerk or just thinks every shot is a good shot. Either way, I know the coaching stinks. The problem can always be solved by some combination of benching the player or coaching the player. Bottom line — I’m not getting into intent or blame today, but I will talk about the coaching.

So, what happened?

The inability to deploy body cameras in Nashville before now is another fundamental failure of leadership. The dynamics behind this failure are similar to the reasons why the budget is a mess. It’s easy to have press releases and talking points. It is more difficult to build and guide a functioning team to accomplish needed change. From my seat in the Metro Council, it is easy to feel like “leadership” means the full-time Mayor with full-time staff. But, I know that from the public perspective, “leadership” means all of us who are at the top of the organization chart.

I believe that, at this moment, MNPD has spent a portion of the capital money that it was appropriated (mostly on servers, storage, and other IT infrastructure) and wants to move forward with more purchases (mostly of cameras), but many of the other parties involved are concerned whether MNPD may be throwing good money after bad. There are concerns about whether the infrastructure that MNPD has built will work, whether it is the correct infrastructure for the job, and that there is not an adequate plan about how the infrastructure will work with other departments. There is also significant concern that the new operating costs of a complete deployment are not known and are not feasible given the current budget crunch. It appears that MNPD may have a preference for pointing to the budget issues for the current delay. Others would point to the other concerns I have mentioned as the reasons for the current delay.  I think the Mayor’s Office is working very hard, aggressively even, to get a reasonable, effective deployment in the field as soon as humanly possible.

Let me get into some of this in more detail.

It seems clear to me that there has not been effective teamwork among the Mayor’s Office (over the last few years), MNPD, the DA, the PD, and the courts. MNPD has what appears to be its own game plan and has been executing it. The DA has been louder than most of the others in letting us know that he has important questions about process and cost. The others have raised similar issues, but more quietly. I have heard some say that there has been no coaching or central control or team captain for this process. I have heard others say that MNPD has been in charge. Either way you look at it, the teamwork has been poor. And the result is that MNPD has moved in a direction that the others have questions about.

I’m told by multiple sources that the technical architecture of the system is unique. The federal government and others use cloud storage. MNPD has purchased physical servers. Those servers are subject to laws that don’t allow non-law enforcement people to use them. That means there is no current way for defense lawyers to review information on the system that is being built. I could go on, but you get it. MNPD believes they are building a better mouse trap. Others are less sure. Either way, the system is apparently unique and never been tested in real-time. I think this factor alone would make a large scale immediate deployment foolish. Before MNPD moves forward with purchasing the thousands of vehicle mounted and body worn cameras that it wants to buy, the other departments in the system need to have some confidence that it will work and that they will be able to interface with what MNPD has designed and built.

The poor teamwork has created other problems too. I believe that, as of today, there is no plan for where and how defense lawyers would review video. There are also multiple approaches around the country for how to deal with redacting personal information or the images of minors in households. There are pros and cons for each approach. But there has been very little conversation in Nashville about what approach to take. The answers to these and other open questions will in large part drive the new annual operating costs of the system. In fact, the main reason why nobody can tell us what the ongoing operating costs will be is because the poor teamwork has prevented these issues from getting anywhere close to solutions.

This narrative gets to the core of several key question…here’s the summary:

Where’s the money? MNPD has spent capital dollars so far mostly on servers and storage. I think they want to move forward with purchasing a large number of cameras. Others aren’t sure MNPD’s system will work without sufficient real-time testing.

Where do we go from here? Nashville is good at implementing whatever its 2 or 3 most important projects are. The poor teamwork that has plagued this project has to stop. There needs to be a coach who is calling the plays, and the players need to run the plays. If we (the public, the media, the Council) are not really clear about who is calling the plays, then we know that nobody is and this ineffectiveness will continue.

When I look at all of these factors together, I believe that the best approach would be to buy just enough cameras to have a meaningful test of the technical infrastructure that has been built. That would get the apparently novel storage infrastructural operational. An initial deployment would also give the various other departments involved a chance to work through the unresolved issues without grinding the gears of justice to a halt. It would also provide real information about any new operating costs.

I may get criticized for parts of this analysis from multiple angles. If that happens, so be it. I’m trying to wear my problem solving hat today. At this point, ideas about how to make the system perfect are less important than getting the beginning of a good system fielded absolutely as soon as possible.

MNPS 3% for Jan. 1 — what just happened?

This morning, the Mayor announced that he had identified a mechanism to pay MNPS employees the 3% raise that Mayor Briley promised them would start on January 1, 2020. Before I explain how it is being funded, some background:

  • The Briley announcement happened in July right AFTER the budget was finalized. He claimed that there would be recurring revenue of $7.5 million per year and that it wouldn’t need Council approval. The source was going to be a re-financing of some MDHA tax increment financing loans with Regions Bank. The announcement was criticized widely as a campaign gimmick. Even inside Metro, nobody understood how it was going to be recurring and nobody understood how to get all $7.5 million to MNPS.
  • This entire conversation about a post-budget, no Council approval, supposedly recurring mid-year raise for MNPS happened only because the Metro government has systematically short-changed employees on pay for many years now.

What was Briley’s plan?

Briley’s administration announced that the $7.5 million would come for an MDHA TIF loan restructuring. I wrote about the details of this funding mechanism in July. There were two things that weren’t known at the time — was it really recurring, and how would MDHA get all of the refinancing proceeds.

About the “recurring” issue, the current administration tells me (and the Mayor said this morning) that this is not recurring. Even back in July, MDHA acknowledged that this funding would require an annual waiver by Regions of its rights to keep the $7.5 million themselves. At best, both in July and now, you could say that you expect that it will continue to happen. But there is no legal right for Metro to get the $7.5 million in future years. That is up to the discretion of the bank, I am told.

About the “how does MNPS get the full $7.5 million” issue…this is complicated. This $7.5 million is property tax money. To understand why the prior administration’s assertion that all $7.5 million would go to MNPS was questionable, you have to understand how property tax money flows through the operating budget. Boring stuff. But important here.

I wrote a TIF step-by-step post in 2018 that explains the process. In summary though, all property tax revenue is automatically divided between Metro’s six “Funds.” Focus on the word “automatically.” Upon receipt of property tax revenue, the money is automatically divided among the six Funds. So the Briley idea that all $7.5 million would go to one of the six Funds — the School Fund — was inconsistent with the way Metro handles property tax revenue.

Under the current operating budget, the School Fund gets about 31.5% of all property tax revenue — so roughly one-third of property tax revenue. Under the Briley plan, nobody ever explained how the other two-thirds that would be allocated automatically to the other five Metro Funds would make its way over to MNPS — especially without Council approval as had been suggested.

What is Cooper’s plan?

At the press conference today, the administration explained that there are two sources to pay for the $7.5 million needed for the January 1 MNPS raise — the MDHA TIF refinancing and “Fund Balance” money.

They told us that $2.5 million would come from the MDHA loan deal with Regions Bank. This matches up with how the automatic allocation of property tax revenue works. That means that the waiver from Regions was worth $7.5 million and, of that amount, approximately one-third ($2.5 million) was allocated to MNPS.

(We should pay attention to the other $5 million that went to other Funds. I believe this means that the city just got $5 million closer to closing the $41.5 million gap in the current year operating budget.)

The administration also told us today that the rest of the $7.5 million is coming from Fund Balance money. The Fund Balance is basically money that has been appropriated in prior years but is unspent. It is typically impossible to get a budget to be spent precisely to the dollar. For obvious reasons, it is better for a department to come in better than budget rather than over budget. When a department ends a year without having spent all the money it was appropriated, the unused money is called “Fund Balance.” Ideally, you would have the Fund Balance accumulate slowly over time.

The Comptroller had two slides that referred to MNPS’s Fund Balance. Like the rest of Metro’s operating budget, for several years now, we have making ends meet at MNPS by using up the accumulated Fund Balance. The audited numbers show that, as of June 30, 2016, the MNPS Fund Balance was about $74 million. Two years later, as of June 30, 2018, the MNPS Fund Balance had eroded to about $35 million. Mayor’s Cooper’s plan is to use Fund Balance money to pay for the rest of the January 1 raises.

Handling the raise this way will require both school board and Council approval in December 2019.

What does it all mean?

Mayor Cooper was clear today that these are not recurring revenues. He committed to work with MNPS and the Council to find recurring revenue in the next full year budget to make this pay increase permanent.

The threshold question we are all facing is whether the city will honor Mayor Briley’s promise to provide the January 1 raises to MNPS. There are nothing but bad answers here — we can either disregard the promise as a flawed gimmick and further push MNPS morale in a bad direction, or we can pay for it with non-recurring revenue (coupled with a verbal promise to make it recurring in the next budget).

I support the decision to fund this. As a city, we have to start on the road to repairing employee compensation somewhere. They deserve this and more.

I support this mechanism for funding the January 1 raise. Briley came up with a mechanism that was not recurring and that was inconsistent with how Metro’s finances work. Cooper has a mechanism that he is transparently saying is not recurring, but at least makes sense within the framework of Metro’s finances.

Do I wish this raise had been funded in the June 2018 budget process? Yes.

Do I wish this raise had been funded in the June 2019 budget process? Yes.

Do I wish the former Mayor hadn’t unilaterally volunteered a raise that wasn’t covered in his own budget? Yes.

Is it good to continue to spend down Fund Balance money? No, not really.

But we are where we are — the promise was made. Employees have counted on it. My decision is that I’d rather pay for these raises and deal with finding recurring revenue in the next full year budget than yet again have Metro renege on a pay promise to employees.

Optimism AND reality

I am optimistic about Metro fixing its finance problems. It also is important that we be realistic too.

For each of the last two years, I and others in the Council have proposed a 50 cent property tax rate increase. I said each time and will repeat now — a 50 cent increase would not have paid for any new government services whatsoever.

Instead, the 50 cents — which would have generated about $162 million per year — was to stop Metro’s financial slide backwards. That new revenue would have provided money to fund promised pay raises for Metro employees, fund our schools, pay known and anticipated debt, replenish Metro’s 5% fund savings, and cover basic minimal inflation. Again, the 50 cent increase would not have paid for any additional sidewalk funding or extra employee or new anything.

So far, the known new revenue found since the election is $12.6 million from the Music City Center. I completely agree with Mayor Cooper’s goal of finding as much new revenue as possible and eliminating inefficiency in government. But, you can see that it will be difficult to find enough revenue or cut enough expenses to equal the $162 million per year that the 50 cent rate increase would generated.

I have pushed so hard for a rate change — including in an election year — because I have believed for some time that we would need one rate change to stop the city’s finances from sliding backwards and a second to start moving forward in providing needed new services for our growing city.

In these situations, it is always a challenge to find the right path forward. Often, footing shifts, and you have to change paths. Finding just the right mix of things to carve back and things to expand, old things to end and new things to start, is a challenge.

For now, my general ground rules are:

  • Any new significant spending for the operating budget is not practical. To be blunt, as an example, assuming the city could get rid of CoreCivic from the jail on Harding Place, there is no way to pay for the additional cost at this time. We need to see the city paying raises for employees, funding our schools, paying known and anticipated debt, replenishing Metro’s 5% fund savings, and covering basic minimal inflation before we can consider any new net costs in the operating budget.
  • The same goes for capital spending that comes with recurring new operating costs. So rebuilding a bridge is okay. But buying things that would require new employees to operate is not practical today.
  • Capital spending on necessary infrastructure must continue. Capital spending is supported by bond debt over 20 to 30 years. This makes the cost of roads and bridges and buildings get spread out over a long time. It’s affordable that way. Also, delaying needed capital improvements just ends up costing more money. (Your water heater costs less to replace before it breaks and causes water damage in your house…the same works for government…normal capital replacement costs less than running things until they fail.) It is very important to maintain scheduled infrastructure capital spending.
  • Economic development is a difficult, mixed bag.
    • I have criticized that this city does not have any written or unwritten policy about what economic development we want to support and where. Without that, Metro gets the widespread criticism that there is now.
    • Very few people think that there should be zero economic incentives. Most everyone would agree that there should be some economic development incentives so long as we have civic agreement about what we are investing in.
    • We have seen the city’s reputation with employees get trashed over the last few years when Metro reneged on its promised pay raises. Do we want to export that reputation outside of Nashville by backing away from deals we have already made with different businesses? I don’t think so. The most difficult developing story is the fact that there seem to be extra costs and handshake deal parts of various ongoing development projects. I think the city is going to struggle with how to honor its word in situations where only a few people in a former administration really understood what Metro was promising.
  • Over the last three operating budgets, Metro departments have already found over $30 million of recurring savings. As much as this stings some departments, I believe that the Cooper administration should keep pushing the departments for more. I am hopeful that Cooper’s team will find some transformative changes that will save money.
  • Some argue that Metro has mismanaged money and can’t be trusted with ANY new revenue until ALL mismanagement has been purged. To them, I would acknowledge that all government including Metro has waste. The fact that the various departments have squeezed more than $30 million of cuts out over the last several years is some evidence of that. But, this is a BOTH problem and not an EITHER/OR problem. I am all in favor of cutting fat and mismanagement. At the same time, revenue has been choked back also over the last decade and not allowed to keep pace with our growing city. That has to be fixed.
  • I have heard a few people appear to argue for an all-at-once $1.50 rate increase. I don’t think this is realistic. I believe that letting the property tax rate remain artificially low has been terrible for Nashvillians. It has overheated how attractive we are for out-of-town residential real estate investors, which fuels gentrification. But it would be unfair to Nashville’s taxpayers to force the full rate correction into one year. The better approach is to do the hard work of stabilizing the city’s finances first and then assess what additional services the city wants to invest in after that.

This is a difficult balance — but it boils down to keep attacking fat and inefficiency, find as much new revenue as possible before a rate increase, no new operating expenses for now, maintain infrastructure capital improvement spending, judge every existing economic development project based on whether it uses operating dollars (bad), capital dollars (better), or revenue bond dollars (best), and judge every potential new economic development project based on goals and policy (none known to exist today). Every budget season for the next several years, all of these should be plugged into a cash forecast (I believe the Finance Department is working on one) and let it tell you what the city’s cash needs are. From there, we need the political will to move the property tax rate toward meeting those needs.

This approach has something for everyone to dislike. No new operating expenses is hard for a growing city. Cutting is hard. Big projects — whether infrastructure or economic development projects that have already started — feel scary or dangerous. Raising the property tax rate costs people money. I’m optimistic because I know Nashville can do this (and because of the Comptroller’s watchful eye, we have to do it). The realities I have laid out are also reason for optimism. We have options. We don’t unlimited paths forward, yet there are clear steps to take and guidelines to follow to get Metro’s finances in better shape to serve all our neighbors.

Statement about Comptroller’s presentation today

Today, the Metro Council has heard presentations from Metro Water Services about expected water rate increases and from the Comptroller for the State of Tennessee about the city government’s financial condition. (Comptroller presentation here.)

The Comptroller has given us the basic facts. Over nearly a decade, Metro has spent more money than it has earned. The city has balanced its budget by spending down savings and selling one-time assets — all while dropping the property tax rate lower than any other city in the State. This can’t continue. It’s that simple. We know it must change.

It would be easy to be intimidated by the size of the challenge. In these situations, there will be a few who will deny or minimize the issues, and there will be a few who say drastic cuts are necessary. The rest of us — most of us — will want to keep a level head. It took years to get here and it will take years to get out.

While it is fair for people to wonder whether we can fix this, the answer is yes. Nashville has many blessings. We are in the middle of an ongoing economic boom with a growing population, low unemployment, and a historically low property tax rate. We have the tools to balance the budget and rebuild reserves. Nearly any city in America would gladly trade their problems for our struggle to keep up with growth.

It is important that everyone hears the hard and direct facts that the Comptroller delivered today. Then after we have absorbed that information, we will still have the reality that Nashville is strong. Our citizens are strong. Our economy is strong.

At its best, a city government helps people live their best lives. That means safety, education, and jobs. Our challenge isn’t our city, its people, or its economy — it is whether our elected leaders can bring this shared vision to life — and whether we can provide the discipline, honesty, and effort, to have Nashville move together to a brighter future. I think we will.

Next steps

We don’t have a date yet, but the new Director of Finance has told me that he is willing to come back to the Council in December to lay out the framework for a plan of action for Metro’s finances. The administration has been on the job for less than 6 weeks. I expect that the response will continue to be a work-in-progress for some time. But it will be good to hear a preliminary game plan from the administration.

 

 

Reading list for Nov. 13 Comptroller presentation

The Comptroller for the State of Tennessee will make a presentation to the Metro Council on November 13, 2019, about Metro’s finances. In advance of that, I went back and read some of my blog posts about the city’s finances:

Pre-Budget Process Thoughts (May 1, 2016): This was my first budget-related post. I questioned why the portion of the budget being spent on debt was increasing during boom times. I said, “You would like to think that if you absolutely kill it on the revenue side, the percentage of your budget that goes toward debt might go down?  If one were a cynic, one would observe that record-breaking revenue increases can’t go on forever, and ask whether we will be able to anticipate when our revenue increases inevitably recede well enough to also pull back on large increases in new long-term debt.”

Math is Hard (April 27, 2017): I noted that from year to year, Metro kept using different numbers to describe what portion of the budget was going to pay debt. I am still not sure why this was happening. But by 2017, there was no consistent way to measure how much of the budget was going toward paying long-term debt.

Unfunded OPEB liability to cross $3B mark this year (October 9, 2017): This is one of several posts over the year making the point that Metro’s completely unfunded obligation for retiree health benefits has consistently grown more rapidly than the city’s budget. That’s a problem.

Storm has been brewing for a while… (May 5, 2018): After the transition to Mayor Briley, the Council was presented with a bad budget. This was the budget that reneged on employee raises and was called “belt-tightening” by the Mayor. This post talks about how it took multiple years to build up to this bad budget.

um…about the budget… (May 11, 2018): I started this post by saying, “The proposed FY19 Metro budget has been out for ten days now…and it’s not good…and this is just the first year of a multi-year problem.” In response, the administration doubled down on its “there’s no problem” campaign. I and the other Council members who tried to address the problems were painted as alarmists.

No Free Lunch (August 19, 2018): After having lost the 2018 budget battle by one vote, this post tried to show the city’s increasing debt problem along side the city’s increasing unfunded retiree benefit obligations.

Metro Debt Dashboard (September 15, 2018): Like the last post, this one tried to collect data to show how out of bounds Metro’s finances had gotten. This post created some back-and-forth between the mayor and me. Briley told the Tennessean, “And I’m even more surprised that Bob Mendes would put out these numbers about our debt and debt service that are just so fundamentally wrong.” This exchange is relevant only to understand how powerful it is when the mayor’s office with its full-time professional finance and communications staff dismiss facts. In large measure, as recently as one year ago, everything that is now considered “fact” about Metro’s finances was dismissed by the Metropolitan Government as “fundamentally wrong.” That aggressive denial is part of why the city’s finances are where they are now.

Metro’s Audited Financials as of 6/30/2018 (December 15, 2018): This one is long…maybe skip it. But if you want to see the latest about the retiree benefit obligations, read it.

Maybe hold back on the high fives for now?? (March 19, 2019): I wrote this post after the administration announced pay raises for employees and was attempting to portray that like the budget was back on track.

The myth that “belt tightening” could fix the budget (May 4, 2019): The title is self-explanatory.

FAQs – FY20 Better Budget (June 6, 2019): This post collects all of my several posts about the budget Nashville is currently operating under.

Met with Comptroller and Mayor today… (October 3, 2019): This one is my last post related to the budget and what the I expect the Comptroller to discuss on November 13.

As a final note, I want to remind everyone that, while it is easy to focus on Metro’s budget problems, these issues are mostly about growing pains. Nashville has an awesome economy. To fix the city government’s budget, it will take discipline, honesty, and effort. We can do this.

Follow-up on reallocating the Gulch bridge dollars

This is a follow-up on yesterday’s post about Mayor Cooper’s announcement to reallocate $17.95 million of capital spending from the stalled Gulch pedestrian bridge to other infrastructure projects around the city. Here’s my post from yesterday. Here’s a good story that WPLN’s Tony Gonzalez put out today.

As the day ended yesterday, I had several open questions. I can report that the Cooper administration has pinned down the details for me.

The first question was about what had been spent already on the bridge project out of the originally approved $18 million. I’m told that it was about $15,000 for engineering and planning, about $21,000 for appraisal services, about $9,000 to a contractor for repairs and maintenance, and about $2,000 for a right of way easement. That leaves approximately $17.95 million of the original $18 million.

On this first question, I also wanted to know how a $2.66 million payment for additional easements fit in the mix. I’ll be really blunt about this. How the $2.66 million was handled in 2016 is complete crap and an example of why people have a hard time trusting the government. On September 27, 2016, the administration sent an email to the Metro Council with a memo that said the money was coming out of the $18 million approved for the bridge. The memo said, “One key fact is that this legislation [to spend $2.66 million on an easement] does NOT appropriate additional funding for the project. Funding was approved by the Council through RS2013-710 which authorized $18 million in G.O. Bonds.”

In reliance of this memo and its representations about the source of the money, the Council passed the legislation in mid-October 2016. But then when the city paid the money a short time later on December 8, 2016, it took the money from another account. That’s why there is still $17.95 out of the original $18 million left for the bridge funding even though there was a $2.66 million payment for an easement in 2016. This is the Mickey Mouse shell game financing nonsense that drove the mayor’s campaign to a 70% win. I hope this administration does better.

The second question was whether there is $17.95 million sitting in a bank account somewhere, or whether this is approved debt that has not yet actually been borrowed by Metro. The answer is that this is approved debt that hasn’t been actually borrowed yet by Metro. Given the strong need for the various infrastructure projects, I don’t expect this to create much or any objection in the Council.

The third question was whether Council approval is necessary to reallocate money to the new proposed projects. To the administration’s credit, when I requested that we sidestep the debate and just err on the side of bringing this to the Council for approval, they agreed. WPLN quoted a spokesperson saying, “in the interest of full transparency and out of respect for the Council process,” they would bring the spending changes to the Council.

In the end, I think most people are only going to think about this in terms of whether they like the infrastructure projects that will be built. I think almost everyone will like them. But these details about how it works are important.