Mayor Karl Dean proposed a $1.8 billion budget proposal to Metro Council members Tuesday night, providing a first look at a spending plan that increases funding to schools and public safety and makes a notable withdrawal from the city’s rainy day fund.
Dean’s proposed budget represents a 5.86 percent increase or about $100 million over the current budget. The presentation, given by Metro Finance Director Rich Riebeling, also showed projected revenue growth, mostly from increased sales and property taxes, of about $55.5 million.
“We have been conservatively optimistic, and so with this year’s budget there are no surprises,” Dean said in a prepared statement. “We are in a good position to implement the same philosophy that has driven our budget decisions from day one: focus on services, invest in our priorities and cut back where we can. This budget allows us to continue our city’s momentum, but in a way that is prudent and fiscally responsible."
As promised by the mayor weeks ago, the budget does not include a property tax increase. In fact, because state law does not allow cities to collect increased revenues from reappraisals, the increase in property values found by the recent reappraisal means the property tax rate will go down.
The proposal includes what Riebeling called a “strong increase” for Metro Nashville Public Schools. While not quite the $44 million increase the school board had requested, Dean’s budget includes an additional $26 million for schools, representing a 3.61 percent increase over the current fiscal year. The $746 million allotment for MNPS would make up 41 percent of the overall Metro Budget.
A $300 million capital spending plan in the proposed budget also includes $95 million for Metro Schools projects, most of which would go toward replacing Goodlettsville Middle School and Tusculum Elementary, renovating Waverly Belmont Junior High School, and building a new elementary school.
Public safety would be 21 percent of the budget. The Metro Nashville Police Department would receive an additional $2.8 million, which will fund staff at the new DNA Crime Lab and the new Madison Police Precinct. The Davidson County Sheriff’s Office would receive a $1 million increase over the current year, and the Nashville Fire Department would see an additional $370,000 in funds.
One item in the proposal that raised eyebrows was a withdrawal of nearly $45 million from the city’s reserves, otherwise known as the rainy day fund. That would represent a larger reliance on the fund than in previous years. While the fiscal year 2004 budget drew $105 million from reserves, according to Riebeling’s presentation, budget’s during Dean’s tenure have used it to a lesser extent: $15.7 million in 2010, and 24.5 million in 2012.
But in a briefing with reporters after the presentation, Riebeling and Dean tried to put the proposal in context. This year’s proposed budget includes $57 million in additional debt service payments, an increased expense they said they anticpated after refinancing part of the city’s debt in 2010. In past budgets, they said, they set aside additional reserve funds to cover some of the debt costs later.
“From a financial standpoint, spending any reserves is too much,” Riebeling said. “But you’ve got to balance the needs of the city with reserves and, as the mayor said eloquently, we’ve built for this day and now it’s time to use it.”
Dean noted several times that the rainy day fund would still be larger after the proposed budget than when he first took office. Riebeling said the proposal would leave the fund with about $110 million.
Council members also seized on the administration’s decision not to propose any operating subsidies for the Municipal Auditorium, the Nashville Farmers' Market, or the Tennessee State Fairgrounds, despite requests from the struggling facilities. Some on the council, like Councilwoman Emily Evans, have raised the concern that withholding subsidies from enterprise funds like the Farmers Market will actually contribute to increasing their deficits, by making it harder for them to generate revenue.
But Riebeling said the administration felt it was better to “keep the pressure” on these agencies, and that asking them to operate within their budget “forces them to be creative.” He conceded that the facilities would need a subsidy at some point in the year. At that point he said, they could request additional funds from the council which could evaluate what progress, if any, had been made toward making the facilities sustainable.
“If you give someone a budget, they’re going to spend that budget,” Dean told reporters, reiterating Riebeling’s prior comments. “So if you fund all that’s requested beyond the revenue that they’re able to produce, that money is gone. The council asked last year, very clearly, to be involved with those three particular departments on their budgets and to be kept informed. This way, this will move progress in terms of those areas looking for ways to improve the way they operate.”
Asked if closing any of the facilities was a possibility, Riebeling said “I don’t think we’ve come to that bridge at this point.” Dean concurred.
Other notable items include: