In his presentation on April 28, Cooper said the proposed rate increase will generate $332 million in new revenue at a time when city officials project to lose $470 million over a 16-month period due to the effects of COVID-19.
"This will be the greatest financial challenge that this city, or any other American city for that matter, has faced in our lifetime," Cooper said.
Cooper said the alternative to raising property taxes, such as not instituting a rate increase or approving a rate increase much lower than what he is proposing, would lead to additional cuts in services as well as mass layoffs among city employees.
“If [Metro Council] is not willing to raise property tax rates substantially, let us know and we will have to begin mass layoffs,” Cooper said. “There is no other way.”
The mayor’s proposed budget—the first since he was elected in September—includes $234 million in cuts and deferred spending; a 50% reduction in discretionary spending, such as economic development grants and grants to local nonprofits; and a flat public schools budget year-over-year.
The budget does not include raises or cost-of-living adjustments for city employees, including teachers, although Cooper said his administration is exploring the option for hazard pay for some employees.
“The hard choices had to be made on discretionary spending, and that’s producing $21 million in savings ... If it’s [considered] discretionary, it’s cut in half,” Cooper said. “In keeping with our doctrine that discretionary pay be cut if half, we cannot pay our valued employees more at this time. We can’t do step [raises], longevity pay or open range pay. We’re just trying to avoid layoffs and keep things the way they are.”
During the presentation, Finance Director Kevin Crumbo echoed Cooper’s concerns that without the proposed tax rate increase and subsequent $300 in million new revenue, city officials would have to further cut discretionary spending, begin mass layoffs and cut back on city services it deems to be non-essential.
“Our largest expenses across Metro government are the services we provide and the people who provide them,” Crumbo said. “Much like other cities around the globe, we would probably be looking at large-scale furloughs and changes to services and really taking our government to what’s known elsewhere as just essential services only, which would be our police [department], our fire [department] and other emergency things that we just have to have.”
Crumbo said the funds allocated in the budget for Metro Nashville Public Schools would remain flat year-over-over. Cooper's budget in is compliance with state laws requiring that the district’s budget remain flat or increase each year and that at least half of the city’s local sales tax revenue be dedicated to schools, according to Crumbo.
"This is not the budget the administration was building before the COVID-19 crisis, but it's the one we can afford to do now," Crumbo said. "Regrettably, a large portion of our sales tax revenue and our related cash receipts dedicated to schools will not be received due to the crisis. Between now and the time we can replace that cash flow with property tax cash flow, [MNPS] must reduce its spending.”
In a series of community meetings held in February, MNPS officials presented a proposed budget for the 2020-21 school year that included an overall budget ask of $950.2 million, a 3% increase over the previous year, which officials said is only what is needed to maintain schools. However, MNPS Director of Schools Adrienne Battle said an additional $85 million would be needed to fully fund the district.
The road ahead
With two months until Metro Council is required to approve the budget, some members have already voiced concerns about Cooper’s proposals, citing lack of transparency on the budget process leading up to his presentation.
“If the administration thinks the budget is a ‘done deal,’ our message is ‘no way,’” District 28 Council Member Tanaka Vercher said in a statement on behalf of the Metro Minority Caucus. “In a challenging time like this, the mayor needs to collaborate with all the best talent around city budgeting and that hasn’t happened yet. I understand that all department heads have not had detailed meetings and the process has not been the ‘transparent’ one the mayor promised. The Metro Minority Caucus has reached out but has not been engaged.”
Council members will either approve the mayor’s budget proposal or approve a substitute budget with or without a property tax increase by the end of June, according to the budget schedule released in late April by the Budget and Finance Committee.
The committee will hold five days of budget hearings beginning May 11, during which departments will have the chance to discuss their requests with council members. Metro Council will then host a public hearing on the budget on June 2 when it is up for consideration on the second of three readings, although it is not yet clear if the meeting will be held virtually or in person.