Tag: budget

Budget wrap-up

I am disappointed about how the budget turned out this year. I guess I’m glad for the debate. At least there now is a broad consensus that we will be right back in this same situation a year from now. I really hate that Metro is choosing to not fix a known, identified problem even though the delay squeezes employees on pay and constituents on services.

I want to thank everyone who has written or called this week with kind words and support. Please know that I consider it a privilege to be one of the voices carrying your message.

Looking forward to next year…

If you follow my posts, you know that I predicted the size of this year’s budget to within a few million dollars. I predicted $2.335 billion, and it came in at $2.332 billion. That wasn’t luck. The size of a budget is pretty predictable when it is playing defense — you pay what you must and not more. Despite some of the packaging and spin, this year’s budget was another status quo defensive exercise.

Using the same principles that I used this year, we can look forward to get a glimpse at what next year will bring. As you look at this, keep in mind that new Metro revenue (aside from the one-time sales) for this year was about $100 million. Here’s the minimum new spending that will be required in FY21:

  • Make up for relying on one-time non-recurring revenue, $41.5 million
  • Pay known existing new bond debt payments, $14.5 million
  • Pay for new bond 2020 bond issuance the Finance Dept. has told us about, about $25 million
  • 3% cost of living adjustment and a step increase for Metro employees, $25 million
  • Increase for MNPS that is the same as this year (i.e <3% cost of living adjustment and no step), $28 million

That’s $134 million of new spending required in FY21 before getting into any expansion of the government at all. This amount wouldn’t allow for the already-announced increase in Barnes Fund funding, or get WeGo Transit back to full funding, or help employees gain ground on what they’ve lost in the last several years, or expand any government service at all, or even cover inflation.

On the Council floor on Tuesday night, I argued that allowing the administration’s budget to go in effect would lay the groundwork for another tough budget season next year.

In my projections, the Finance Dept. had me assume that revenue will grow by $85 million in the upcoming year. Let’s assume they are conservative and the new revenue will be $100 million again. That would mean FY21 would have $100 million in new revenue and at least the $134 million in the basic new expenses listed above. The budget would again be looking at a shortfall of at least $34 million. Like the last few years, the only ways to fix this will be some combination of one-time non-recurring revenue (i.e., selling off more assets), cuts, and new property taxes.

Multiple district council members told me that in the days and hours before the vote the Mayor and his office told them that he would raise the tax rate next year. He’s denied that to the press. I guess you all can draw your own conclusions about what to make of that.

I continue to view this budget problem as a three-headed monster. There’s revenue, expenses, and determining the impact of economic incentives.

On revenue — that’s talking about property taxes. I think everyone knows where I stand on that issue.

On expenses — the Finance Dept. has been aggressive on that since before Mayor Briley took office. With the new budget in place, Metro will have cut at least $36 million in expenses over about two and a half years. Many departments have gotten rid of whatever fat there was and are now cutting into constituent services. I trust the Finance will continue to be aggressive about this.

On the impact of economic incentives — I will continue to work hard on tax increment financing reform. Beyond that, there continues to be a lot of information and misinformation the convention center. If I am re-elected, I think that topic will need more attention.

I’ll keep working on all three of these. Thanks again to everyone who helped trying to get a better budget passed this year. I genuinely appreciate the support.

New CM Vercher budget amendment

This morning, CM Tanaka Vercher, who is Chair of the Council Budget & Finance Committee, has released a proposed amendment to her Substitute Budget. I have reviewed her amendment and support it.

As a starting point, here’s my post from a few days ago about the five budget proposals.

In a nutshell, she and I were 5.2 cents apart on the proposed tax rate. Her amendment essentially splits the difference and she now is proposing a rate adjustment of 49.8 cents, which would move Metro’s combined property tax rate to $3.653. Her amendment would:

  • provide $50 million new MNPS funding (which is about $22 million more than the Mayor’s proposal); this is adequate to provide a 4% cost of living increase and a step increase in salaries;
  • fund 9 new firefighter and 20 new police positions;
  • allow for extended community center hours;
  • provide an additional $6.15 million in funding for WeGo Transit;
  • provide new Codes Department positions; and
  • expand support for important non-profits in Nashville.

I’ve updated my chart comparing the various proposals here.

This is not exactly what I wanted to achieve, but it is pretty close. And I have to give Chair Vercher credit — her final product covers fire, police, library, transit, plus 4% COLA and a step increase for MNPS, plus stockpiling money for the expected 2020 next Metro bond issuance, and saves a material amount for next year’s raises. I think that’s a good final product.

Here’s the statement of support I am issuing through the Metro Council office:

I have seen Chair Vercher’s amendment and support it. 
 
I appreciate Chair Vercher’s commitment to properly fund the Metro government both for this year and next year. We have been debating a tax rate adjustment since May 2018. It has taken a year of public discussion, but I am glad to see a growing consensus that status quo isn’t good enough. 
 
I believe Chair Vercher’s budget moves Nashville forward. Please join me in supporting her budget as amended.
CORRECTION: I updated the first bullet point to be accurate…my first post said there was $50 million more than the Mayor’s budget…but it is $50 million in new funding, which is about $22 million more than what the Mayor proposes.

5 budgets???

Mayor Briley proposed his budget just before the May 1 deadline set out in the Metro Charter. I got mine out on May 28. Another three were sent to Council members on Friday afternoon. One of them was expected — from Budget & Finance Committee Chair Tanaka Vercher. One had been rumored for a few days (CM Glover). And the last one was apparently a surprise to just about everyone (CM Pulley).

Then the Mayor dropped a Facebook press release around 5pm on Friday afternoon complaining about there being too many budget choices.

It is a lot to sort through…but here’s a summary of the similarities and differences between the plans.

When you are looking at the summary, keep your eye on several key points:

  • Which proposals rely on one-time non-recurring revenue? This is a sloppy practice.
  • The school system is clear that, without at least $55 million in new revenue, they cannot achieve even 5% raises. Details here. Only the Mendes/Davis plan does this.
  • Look to see if a plan provides funding for next year (FY21) or is limited to this year only. Only the Vercher and Mendes/Davis plans create adequate funding for FY21.
  • Look to see if a plan has the flexibility to fix the under-funding of the MTA budget.
  • Look at each proposed property tax. Three plans have a rate increase. Two don’t.

Finally, for more info, here’s a link to all my budget posts…and my FAQs about the Mendes/Davis budget proposal.

FAQs – FY20 Better Budget

As we get into the last few weeks of the Metro budget process, I put together a list of frequently asked questions and links to my budget blog posts.

The FAQs are here.

Here are previous posts about this year’s budget:

Maybe hold back on the high fives for now?? (March 19)

Proposed FY20 budget expected tomorrow (April 30)

1st thoughts about Mayor’s proposed FY20 budget (May 3)

The myth that “belt tightening” could fix the budget (May 4)

Impact of economic development spending on property tax rate (May 16)

A better budget for Nashville (May 28)

What about the $9M for transit? (May 28)

For last year’s budget posts, see:

Updated FAQs (June 10, 2018)

A better budget for Nashville

The FY20 operating budget proposed by the administration falls short. I along with other Council members will propose a better budget for Nashville. Council Member Anthony Davis has agreed to be a co-sponsor. We are inviting others to sign on too.

(For background, my posts from last year’s budget season are linked here. And here are this year’s budget posts from March 19, April 30, May 3, May 4, and May 16.)

The administration’s budget doesn’t work because it is still focused on cutting costs and selling assets when the city is expanding rapidly. After repealing employee pay raises last year, selling at least $16 million of one-time assets this year, slashing about $15 million in expenses over the  last 18 months, and planning to cut another $19 million of expenses in FY20, the budget is still a mess and has to rely on $41.5 million of one-time non-recurring revenue to make ends meet.

The conventional wisdom in the courthouse is that the administration will propose a property tax increase next year — after the election. The administration’s proposed budget squeezes employees on pay and citizens on services in the meantime. It deepens problems when it should be creating capacity. It worries about opposition when it should be inspiring change.

A better budget for Nashville would improve school employee pay, allow the city to pay its debts without selling off one-time assets, and allow a small cushion to get through to the next scheduled property value reassessment in two years. To do this, we will propose a 52.5 cent property tax rate adjustment. This would:

  • increase new MNPS funding from $28 million to $55 million
  • pay for anticipated new debt obligations
  • not rely on collecting a $30 million one-time payment from outsourcing parking enforcement
  • not rely on collecting a $11.5 million one-time payment from selling the district energy system
  • replenish the city’s savings account, or “Funds Balance”
  • allow for reasonable employee raises next year
  • allow for basic 1.9% inflation without having to continue department cuts into FY21

You can see the details here. Like our proposal last year, there’s nothing fancy here. There are no new initiatives here. The reality is a 52.5 cent property tax adjustment is required to maintain basic government functions without relying on cuts or selling off one-time assets. For every $100,000 of home value, 52.5 cents translates into $131.25 per year, or just under $11 per month.

The next steps are for the Council to continue it’s budget process. We have 2nd reading on June 4 and 3rd/final reading on June 18. We will place this alternative budget in the “Amendments Package” for 2nd reading, but most of the deciding and voting will be at 3rd reading.

Your emails and calls matter. The budget process is designed to favor a choice between 2 budgets — the Mayor’s budget and the Substitute from the Budget & Finance Committee Chair. Our other alternative — a “Second Substitute” — is not allowed to have any amendments under the Council’s own rules. If you support this better budget, please reach out to the Council and let us know what you think. You can find individual contact information here or email us as a group at CouncilMembers@nashville.gov.

Impact of economic development spending on property tax rate

When I proposed an increased property tax rate last year, one of the arguments against was that the city should stop all the corporate giveaways before thinking about a rate increase.

My response then was that, if we could wave a magic wand and cancel all current economic incentives, we would still need to fix the improperly set tax rate. I didn’t offer evidence beyond that statement. The truth is that I didn’t want to be seen as defending the way Nashville does economic incentives.

As we enter budget season, this same argument is coming up again. This time, I have decided to dip my toes into debating this topic. Before getting to that…I want to be clear. Economic incentive tools are not inherently “good” or “bad.” There is no one right answer. Nashville should offer economic incentives when it helps the city achieve its goals. My objection is not to the idea of incentives.

Incentives should be made according to a policy that is known and agreed upon collectively. Nashville hasn’t done this. Incentives should be measured and graded by consistent standards. Nashville doesn’t do this. Since I’ve been in office, I have tried to create more transparency, more information, and more responsiveness to the public about how incentives are considered and awarded.

Turning toward the budget, the numbers don’t lie. If we immediately undid every existing incentive, it would not be enough to properly fund the Metro government for our growing city. This statement is not a defense of how Nashville sets or executes incentive policy.

At a macro level, the rate adjustment that was needed last year would have generated approximately $150 million per year. Just applying a “feels like” test, I don’t think there is anyone who would argue that Metro spends more than $150 million per year on corporate economic incentives. Yes, killing all incentives would make a dent in $150 million of need. But from even a top level cursory review, it isn’t plausible to argue that eliminating incentives would fix Metro’s budget problem.

Getting in the weeds, I took a quick stab at finding the total impact of economic development on the operating budget. Ignoring all potential benefits to Nashville, and just focusing on the costs, I found about $41 million of impact on the operating budget, which translates to about 13 cents of the property tax rate. You can see my quick, approximate spreadsheet here.

For a $300,000 home, 13 cents of property taxes is about $100. Would anyone want to trade lowering their property taxes by $100 for getting rid of every corporate incentive currently in effect in Nashville? For me, I’d want to explore the benefits side of that equation before I made that deal. It sucks that the city has no agreed upon way to measure and grade economic incentives. But either way, we should be able to agree that eliminating all incentives wouldn’t fully or even mostly fix the improperly set tax rate.

Finally, remember that I am NOT saying that economic incentives cost the city 13 cents of the property tax rate. I am saying that, even if one were to assume that Nashville gets NO benefits whatsoever from these economic incentives, it would translate into about 13 cents of the property tax rate.

The myth that “belt tightening” could fix the budget

A year ago, many of us argued that Metro’s property tax revenue was out of step with the city’s historical practices and that this was the leading cause of Metro’s budget problems. Links to my posts from last year are here.

The counter-narrative from the Mayor’s office and a slim majority of the Council was that the city could “tighten its belt” on expenses to solve the budget problems.

The Mayor’s budget for the current FY19 — which the Council ended up approving last June — called for Metro departments to cut $11.5 million in expenses through the course of this year. You can see that at p. 18 of last year’s budget presentation:

and at page 5 of this year’s presentation:

For the Council, this amount of belt tightening wasn’t enough and a “Blue Ribbon Commission” was created to find more cuts. After working on this project since last fall, the Blue Ribbon Commission has suggested that another approximately $19 million of expenses should be trimmed from the Metro and MNPS budgets. See page 32 of this year’s presentation.

I have confirmed that the Mayor’s proposed budget accepts and adopts all of the Blue Ribbon Commission’s recommendations about cutting expenses for the upcoming FY20.

The upshot is that even after slashing $11.5 million in expenses in FY19, and planning to cut another $19 million in FY20, the budget is still a mess and has to rely on $41.5 million of one-time non-recurring revenue to make ends meet.

Last year, the numbers didn’t lie. 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.

1st thoughts about Mayor’s proposed FY20 budget

Late in the afternoon on May 1, the Council received a PowerPoint presentation about the Mayor’s proposed FY20 operating budget. I pushed out a series of tweets that evening with my first thoughts. Here they are:

I’ll get more information out about the budget and potential next steps in the coming weeks.

Proposed FY20 budget expected tomorrow

The Mayor’s proposed FY20 budget is expected to be out tomorrow. This post is about what I am expecting to see in it. There’s no way to talk about that without a lot of numbers. My apologies in advance for that.

Before I get going — keep in mind that this isn’t a discussion of numbers just for the sake of numbers. The budget is a moral document that is hard proof of the city’s priorities. There’s no way to debate the priorities without understanding the numbers.

I’ve been prepping for this budget season with my own sort of Spring Training. In March, in writing this about proposed pay raises, I commented that the FY20 budget would need to have at least $105 million in new expenses:

Even if we were to pretend there is no inflation, the total is $105.8 million of new obligations for FY20 according to Metro Finance’s numbers last year.

And yesterday, I predicted the same $105 million increase in the overall operating budget, up to $2.335 billion for FY20:

At the State of Metro address today, the Mayor told us that the proposed FY20 operating budget would be $2.33 billion. So my prediction was off by $5 million (or 0.2%).

I haven’t seen any part of the upcoming proposed budget yet, but having my prediction be this close gives me some confidence of what I think will be in this budget.

Revenue: My predictions are based on there being $90 million of new tax revenue, using $10 million from the Funds Balance (which is the city’s savings account), and $40 million from one-time non-recurring revenue. These numbers work together. I might be off on a few, but I think the total of all of them will be pretty close.

For example, the parking privatization deal (if approved) is supposed to generate one-time revenue of $34 million by June 30, 2020. Depending on when Metro would book that revenue, it might impact both my Funds Balance and one-time revenue predictions. In the end, these timing issues don’t really matter.

What’s important is that I am expecting the FY20 budget to rely on and need the $34 million from the parking deal by June 30, 2020 to make ends meet.

Schools: I assumed that the proposed budget would fund a 3% raise. That’s what the Mayor announced today in the State of Metro address. The requested MNPS budget was for 10% raises. This request is apparently being rejected.

One unknown is whether the Mayor will attempt to make the 3% raises contingent on the school board entering into a Memorandum of Understanding with Metro. At the State of Metro address, the Mayor repeated his request that the school board enter an MOU with Metro to give Metro more control over “finances, operations, and human resources.”

Most Metro insiders do not know what this would look like. I don’t know whether the school board will agree to this. I don’t know whether the Council would require the MOU. We don’t know yet whether the Mayor will demand the MOU in exchange for the 3% raise .

New spending: I assumed that the Mayor would propose very limited new spending. I guessed $4 million. At the address today, he mentioned about $1.5 million in new non-salary spending. We’ll see the details when the budget comes out.

Ongoing departmental “targeted savings”: One continuing challenge is that inflation is running at about 1.9%. Metro isn’t immune to this. Normally, you’d expect to see an operating budget increase to cover inflation at least. I have assumed that Metro is ignoring inflation and not increasing any spending (aside from employee wages). How do you get away with ignoring inflation?

The answer is that, through this current fiscal year, Metro Finance has continued to demand “targeted savings” (aka cuts) from each department. I am told that the total targeted savings for FY19 across all departments are in the range of $11.5 million. This isn’t enough to cover inflation. For this reason, I would expect that the departments will be told to target even more savings (aka cut more) during the upcoming FY20.

Metro employee raises: The Mayor has been telling the media since March that he intends to give employees their cost of living increase this year. I have numbers from last year for what that would cost. So that part of my budget guess was pretty reliable.

Increased debt service payments: FY20 was always going to have a dramatic increase in the amount of annual debt service payments. This has been known for several years. During the speech today, the Mayor mentioned this briefly. He acknowledged that the debt service payments would be 15% higher in FY20 than the current year.

What does it all mean? Again, I’m not going through these numbers for fun. The goal is to see what’s being valued in the proposed budget.

On the plus side, even if it a year late and several percentage points short, there will be employee raises in the Mayor’s proposed FY20 budget. On the down side, it looks like this will be another fundamentally under-funded budget that relies on $30 to $40 million in one-time revenue coming in by June 30, 2020, having departments find even more “targeted savings,” and still being behind on employee wages. If my sense of what to expect bears out when we see the budget in the coming days, we’ll all have to reflect on whether these choices match our values as a city.

I’ll keep you posted on my thoughts as the budget season unfolds.

Maybe hold back on the high fives for now??

Yesterday, the administration announced its intention to give Metro employees their overdue cost of living pay raise in the upcoming budget. I fully support that. But I think the Metro Council needs to hold back on any congratulatory high fives until the Mayor presents his budget in late April. For now, we don’t have any idea about how this is being accomplished.

The press release announcing the pay raise said that revenue is increasing. But, that’s sort of a given. The question is how much is it increasing? As data points, remember that the biggest revenue increases ever (without a tax increase) were several years ago and were in the range of $120 million. At the time, this was described as extraordinary. And during last year’s budget season, Metro Finance conservatively estimated that revenue growth for the upcoming fiscal year (FY20) would be about $65 million. For the sake of argument, let’s assume that FY20 revenue growth will be somewhere between Metro Finance’s conservative $65 million estimate and the all time record of about $120 million.

Let’s move on and consider what that new revenue will buy. My starting point is the information that Metro Finance gave us last budget season (so, that’s 9-10 months ago). We were told that certain FY20 increases in expenses were unavoidable:

  1. Replace one-time sales built into the FY19 budget, $38 million
  2. Known long term debt increases for FY20, $42.6 million
  3. Pay plan for FY20, $24.4 million
  4. Inflation (1.8%) for General Fund for FY20, $20.1 million
  5. Inflation (1.8%) for Schools Fund for FY20, $16.8 million

This means that less than a year ago, Metro Finance expected a total to $142.7 million of new obligations in FY20. Even if we were to pretend there is no inflation, the total is $105.8 million of new obligations for FY20 according to Metro Finance’s numbers last year.

So, when the press release yesterday said that revenue is increasing…well, let’s hope that the projected revenue increase of $65 million was very, very low. Otherwise, the pay plan promise the Mayor made yesterday doesn’t add up.

The bottom line is that you can’t tighten your belt and promise new spending unless something really magical has happened with the city’s revenue (or you keep selling off Metro assets to make ends meet).

NOTES: All the numbers used here came from Metro Finance. My various posts with these numbers from last budget season are here. Also, I wrote this quickly because I need to be in court for a client shortly. Please excuse any typos.

…more on the proposed AMZN incentive…

At the Council Budget & Finance Committee yesterday, the administration gave an extended description of how beneficial Amazon will be for Metro. The numbers were flying so fast, and (so far) not supported by any documentation, and it was hard to keep up. But the gist of the administration’s argument is that there will be many tens of millions of dollars of financial benefit to Metro because Amazon is coming to town and, therefore, the $500 per job proposed incentive is a no-brainer.

I pushed back on that…and that got some twitter coverage:

I’m going to try to give more nuance to my argument on this.

For context, remember during transit when the core foundation of the argument in favor of the referendum was “a gazillion people are going to move here in the next 20 years…so we better do whatever it takes to accommodate them.” Compare that to now when 5,000 of those gazillion are in fact going to move here in the next 2 to 7 years. Now, the argument is “these 5,000 people are going to create a huge amount of new property tax, sales tax, and personalty tax revenue that we really need and want, so let’s pay them an incentive.”

I view the claim that the 5,000 will create enormous new revenue that Nashville could never otherwise obtain to be false, or at least a half-truth. If someone wants to make the argument that Amazon is bringing Nashville a certain amount of new revenue more quickly than we would otherwise get it, I am all ears. But when you figure the value of them moving here, you just can’t count ALL of the revenue they create — we should only be counting revenue that we would not get in some other way.

As an example, let’s talk about property tax revenue. I feel confident that the owners of Nashville Yards fully intended to build a building on the Amazon site sometime in the next 5-7 years, at the latest. Now with Amazon coming to town, the building might be built in 3 years. So, I am open to a discussion about the value to Nashville to getting the property tax revenue for those extra 2-4 years. But don’t tell me that ALL the property tax revenue for the rest of time is due to Amazon coming to town.

Like most everyone, I’m glad that Amazon has chosen Nashville. We need a fully honest discussion of the economic benefit. Not pie in the sky overblown statistics.

Update on BL -1319 about tax increment financing…

There’s a tax increment financing reform bill (BL2018-1319) on 3rd and final reading next week. The bill is here. Council Director Jameson’s analysis is here. My prior posts about -1319 are here and here. It might also be useful to read this about the issues from the proposed Donelson transit-oriented development that fell just a few votes short of passing in August.

The summary is that -1319 would re-balance how much of new property tax revenue from redevelopment districts is used to pay development loans versus how much is used for Metro’s operating budget. In 2016, the Council passed a bill to have Metro withhold “debt services taxes” from new TIF loans. So, since 2016, for new TIF loans, Metro has been required to set aside about 15% of property tax revenues from the new TIF projects to pay for Metro’s own long term debt. This has left the other 85% of new tax revenue being available to pay development loans. I know everyone would agree that this 2016 law hasn’t created the slightest speed bump to Nashville’s economy. Now, -1319 would expand on this principle so that Metro would also keep “schools fund taxes” for new TIF properties. This would expand the hold back from 15% to about 46% — with the other 54% still being available to pay development loans.

As Metro continues to look hard at radically expanding the use of tax increment financing in transit oriented development all across the city, it is critical that we have a balance between supporting development and paying for basic government functions.

Before -1319 passed unanimously on 2nd reading last week, two Council members asked why -1319 can’t wait until the recently passed tax increment financing study group completes its work (which should be late spring 2019). I responded by saying that, no matter what the  study group comes up with, it will be important to re-balance how the new tax dollars are split between development loans and the operating budget. I still feel this way, but wanted to explore the objections of my two colleagues.

As a result, I negotiated with MDHA (through a lawyer they have working on this) for a TIF moratorium through June 30, 2019. We agreed that for that time there would be no new TIF loans (unless Council, MDHA, and the Mayor all agreed) and there would be no new redevelopment district legislation introduced. From my perspective, if I was being asked by some to hold off on -1319 while the study group does its work, then I would want to know that everyone’s pencils would be down and there would be no new loans and no new TIF district legislation while the study group does its work. MDHA agreed. But the Mayor’s office would not.

The clear implication is that there are plans in the works to introduce a new redevelopment district between now and June 30. Presumably, the intent is for this new redevelopment district to exist for decades into the future under today’s ground rules rather than a new set of ground rules. As a result of the Mayor’s office saying no, I expect:

  1. MDHA will likely fall in line with the Mayor’s office and work against -1319 even though I had a compromise worked out with MDHA.
  2. Some will argue that “well, this won’t actually get any more money for schools.” I haven’t yet figured out how this can possibly be. If you specifically hold back money for schools instead of development loans, then how can it not result in more money for schools??
  3. Some will argue that -1391 will kill tax increment financing as a useful development tool. For those people, I’d note that taking out the 15% for debt services taxes a few years ago didn’t slow down the economy at all. And if -1319 passes, a majority of the tax revenue from new TIF properties would still be available for development loans. This isn’t anti-development by any means.

I will pursue passage of -1319 next week.

(written in a hurry…please excuse typos…)

Metro Debt Dashboard

From time-to-time, I hunt around for precise numbers about Metro’s long term debt. I decided to collect the stats in one place. Here’s my Metro Debt Dashboard.

I know some of you like to look at source documents. For the six charts on the dashboard, here are the source documents:

  1. General Obligation Bond Debt
  2. Revenue Bond Debt
    • For Water & Sewer revenue bond debt, see FY2019 Treasurer’s Report presentation (link above), at slide 8.
    • For Convention Center Authority revenue bond debt, see FY2019 Treasurer’s Report presentation (link above), at slide 10.
    • For Sports Authority revenue bond debt, see FY2019 Treasurer’s Report presentation (link above), at slide 10.
    • For Sports Authority soccer stadium debt, see RS2017-910.
  3. Savings as % of budget
    • FY2019 operating budget ordinance, BL2018-1184, at page 4.
  4. Debt per capita among 50 largest cities
  5. Debt service as % of operating budget
    • For this one, Metro Finance hasn’t always calculated the statistic the same way, and the statistic has not been published for all fiscal years.
    • I calculate this statistic by looking at the operating budget ordinance and dividing “Debt Services Funds” by “Net Appropriation By District.” For some years, this matches Metro Finance’s published number precisely. But for some, my calculation is a few tenths of a percent different than Metro Finance’s.
    • For FY13 and FY19, the number is my calculation.
    • For FY14 to FY18, the number is from slide 35 of the FY18 budget presentation by Metro Finance.
  6. Retiree benefit obligations

 

Updated FAQs about proposed 50 cent rate correction

As we get into the last few weeks of the Metro budget process, I have updated my frequently asked question list. You can see it here.

Also, for a longer discussion of the budget, check out the Nashville Sounding Board interview that Council member Tanaka Vercher and I gave a few days ago.

The new FAQs list is pretty thorough, but if you want to read my previous posts about the budget process, they are here:

um…about the budget… (May 11)

Out of step with historic practice (May 18)

The budget problem and the proposal (May 18)

 

 

What is the opposite of land banking?

The purpose of a land bank is to save surplus real estate to be available for future affordable housing developments. Since the cost of land in Nashville is what makes affordability difficult, land banking is an important tool for affordable housing.

Affordable housing advocates in Nashville have been asking the city to form a land bank for some time. And most recently, Mayor Barry’s Transit & Affordability Taskforce recommended in its final report that Metro should “Use community land banks…to obtain and hold property for affordable housing needs.”

Unfortunately, the proposed Metro budget seems to be going in the opposite direction. Instead of saving surplus land for future development, the budget presented to the Council would sell $23 million of prime surplus property. This May 7 letter to the Council has all of the details that are currently available.

The three properties to be sold are Murrell School in Edgehill, the Green Hills Fire Station, and 3800 Charlotte. As you can tell from the projected $23 million sales price, this is desirable real estate in desirable locations. Instead of saving this land for future Metro needs or for future affordable housing developments, Metro is proposing to have a one-time sale to prop up its operating budget for the next fiscal year.

It is terrible policy to be selling surplus real estate to make ends meet for an annual operating budget. Just terrible.

Beyond this generally bad policy, there is some dark irony in the proposed budget for affordable housing advocates. According to page 22 of the Budget Presentation, the $10 million for the Barnes Fund this year will come from the one-time property sales proceeds!!! This means that the very surplus property in desirable locations that would be perfect to be banked for future use is being sold off to fund the Barnes Fund this year. So, no land banking and the Barnes Fund funding is contingent on one-time, non-recurring real estate sale proceeds. There’s no way to consider this as anything but a step backwards in Nashville’s commitment to affordable housing.

 

NOTE: Some will read this post along and conclude that I am an irresponsible tax and spend guy. Not so. As I have said in another post, in addition to properly funding the revenue side of its budget:

“I am confident that the Metro Council is going to reassess how economic incentives are judged and awarded. Most citizens believe that downtown has enough momentum to be self-sustaining and they would like to see more tax dollars spent in communities outside of downtown. Unfortunately, any reassessment and realignment like this won’t happen overnight or in a single year.

“In the short-term then, we must look at revenue and expenses and how to make ends meet while also honoring obligations to schools and employees.

“On the expense side, I expect that the Council will be proposing many cuts to many items in the upcoming budget. We are too early in the process for me to have an idea of what those cuts will be. However, I am certain that there is not enough fat in the budget to cut that would allow Metro to honor its school and employee obligations. We have to look at the revenue also. This has been true historically, and it is true now.”