Nashville’s Metro Council is taking the hit for falling asleep at the wheel in a period of unprecedented prosperity and waking up to a budget shortfall in mid-2018.
“We’ve been drunken by our growth and the label of the It City,” Councilwoman Tanaka Vercher admits. “But this is what happens in growth. It stabilizes.”
Counties throughout the state all must deal with state-mandated reappraisals on four-, five- or six-year cycles. And if there’s a lesson to be learned from Nashville’s mistakes, it might be tackling a big-ticket proposal – in this case, transit – during a reappraisal year.
In Davidson County, Metro Council is hardly the only one to blame for the impending shortfall.
In fact, if Council members had known in 2017 what they know now, they might have raised the certified rate in anticipation of the reappraisal challenges and other revenue shortages, Vercher says.
No recommendation to adjust the property tax rate came from the office of Mayor Megan Barry, who might have been just a little distracted from her job, though nobody’s willing to admit it.
Barry hoped her legacy would be a shining mass transit plan reshaping the way people travel in Nashville. Instead, she resigned from office after admitting to a two-year affair with her bodyguard, former Metro Police Sgt. Rob Forrest, and pleading guilty to theft.
Barry’s transit plan referendum, which called for raising the sales tax and a host of other taxes, weighed heavily on the council’s mind in 2017 and took up most of the energy of the Barry administration, even though the former mayor still had time to jet around the world with the chief of her security detail.
Her decision to have an affair with Forrest was about as ill-conceived as the $5 billion-plus transit plan – $9 billion-plus for operation and maintenance – that won approval from only five of 35 Davidson County districts and went down 64 to 36 percent. The transit plan didn’t reach the edges of Metro, and it put too much emphasis on a downtown tunnel that could have wound up in the boondoggle category.
Barry’s demise – from political rock star to cast-off – set the stage for the transit plan’s failure. If voters couldn’t believe in Barry as a person, how could they back her biggest program?
They couldn’t, and the chickens are coming home to roost.
“I think in looking back … transit was at the forefront of everything. It sucked the air out of the room. It was so time consuming, and it dominated all conversations,” Vercher explains.
No matter whether council members were discussing affordable housing or land use, the talk always went back to the transit referendum and its impact on taxpayers.
And Vercher says it “absolutely” played a role in the council’s decision not to raise the tax rate last year.
Overflowing plate
The council’s eyes might have been bigger than its stomach. Even as it chased Barry’s mass transit plan, it also got sidetracked on construction of a soccer stadium, which is still in the works, and stumbled on matters such as Fort Negley and the old Nashville Sounds stadium and whether to put it in the hands of a private developer.
All of this came with plenty of surplus revenue and a hefty reserve fund, which it wound up raiding. Thus, for the second time in Metro history it opted against adjusting the certified tax rate upward to ward off potential losses.
Metro Councilman Freddie O’Connell explains everything came together at the wrong time.
“If I think about how we so quickly moved from an era of prosperity to an era of austerity, I think the moment kind of got away from us,” says O’Connell, who represents District 19, including the downtown area.
O’Connell refuses to second-guess the property assessor’s office for appraisals that saw thousands of commercial properties have their values lowered on appeal by the Board of Equalization.
Property experts call it a difficult reappraisal year because of the number of large private construction projects with little basis for comparisons.
Most Nashvillians realize the city grew and its property values increased since the 2013 assessment, O’Connell adds. And he points out the large commercial interests that challenged their valuations are capable of hiring professional firms to “navigate” the appraisal challenge process.
“Even if we knew for certain the best work possible had been done by the property assessor’s office, it’s not to say that somebody still couldn’t come through and find millions of dollars in challenges that are going to be validated, right?” O’Connell says.
Even O’Connell acknowledges he challenged the appraisal on his house in 2009 at the height of recession, using a private appraisal to challenge the property assessor’s office to show him a comparable rate. In 2017, though, after enjoying eight years of appreciation, and as a public school parent, he was glad to offer a return on his investment to city coffers.
On the other hand, Metro’s property tax rate is at a historical low and marks only the second time the council hasn’t sought a rate adjustment after appraisal, O’Connell adds.
Metro Councilman Steve Glover isn’t quite as kind, saying this is “the day of reckoning” for bad budget decisions.
The Hermitage area representative says he started warning council members about the potential for a budget standstill years ago. He won’t support any property tax, either, to rectify the situation, saying he knows where money exists in the budget to redirect to council priorities.
Property value increases were “unbelievable” in some areas of Nashville, something Metro leaders should have anticipated when setting this year’s budget, Glover adds.
A sure sign of trouble is spending excess money and still reaching into the savings account to run the government, he notes. All the while, the Council failed to realize the market would adjust based on supply and demand with property owners saying they weren’t getting “the full benefit” of the value Metro placed on their property.
“I don’t think we point fingers, who did what wrong or whatever. We just need to acknowledge the fact we’ve been terrible managers of taxpayer dollars over the last several years. We have. We’ve stunk at it,” Glover says.
No doubt, the council had no way of knowing Barry would resign in shame before the transit plan. And council members took for granted the money would be waiting in a pot of gold at the end of the rainbow.
As Glover points out, however, money management means putting some cash back for a rainy day. And that day drew nigh well before they realized they were in the midst of the perfect storm.
Sam Stockard is a Nashville-based reporter covering the Legislature and Metro Nashville Council for the Nashville Ledger, Memphis Daily News, Knoxville Ledger and Hamilton County Herald. He can be reached at sstockard44@gmail.com.