Sunday, June 17, 2018

(Part 1) What's on the Council agenda for July 19th: Passing the annual operating budget

By Rod Williams - The Metro Council will meet Tuesday, June 19, 2018 at 6:30 PM in the Council chamber at the Metro Courthouse. Here is a copy of the Council agenda and the staff analysis for those who want to watch the Council meeting and follow along.  There are several important items on the agenda but by far the most important is the operating budget.

The Operating Budget, Bill BL2018-1184

This bill is on third and final reading.  Should the process of passing a budget get bogged down for some reason and not pass tonight, the Council would have to hold a special session between now and the end of the month.  If the Council does not pass a budget, the mayor's budget becomes law without council action.

The mayor's budget is what is initially before the Council. This is a $2.23 billion dollar budget. The current Fiscal Year 2018 budget is for  $2.21 billion. The mayor’s proposed budget for Fiscal Year 2019 represents an overall increase of $20.4 million. This year's budget does not call for a tax increase. The budget is said to be "short" $34 million due to $26 million less being generated in property tax revenues than anticipated, primarily due to large companies successfully challenging  their Metro tax appraisal, and $8 million less being received from the State to support Metro schools, as a result of declining enrollment.  For a more detailed explanation of what is in the budget see the staff analysis. To become an expert on the Metro budget, see Citizens' Guide to the Metro Budget.

Two areas most impacted by what s perceived to be a budget shortage is Metro Schools and a promised Metro employee Cost of Living pay increase.  The schools asked for $44.7 million additional in this years budget and the mayors budget only gives them $5 million additional. 

An area of concern to me is that the budget under funds the various reserve funds. This is not prudent money management and this action along any other bad economic news could impact Nashville's bond rating.

The process of approving the budget is that the mayor first holds budget "discussions" with department heads and their top staff who make a pitch for the funding they want.  The mayor and his staff estimate the city's anticipated revenue and the mayor's office then develops a budget which is presented to the Metro Council.  

The Budget and Finance Committee then holds earnings on the budget where each department head and their top assistants appear before the Committee and make the case for their budget.  If they feel the major cut their budget request too much, they appeal to the Council to increase their funding.  The Budget and Finance Committee then tweaks the mayors budget and shifts some money around and this product is then presented to the Council as the "substitute" budget. 

The substitute budget does not call for a tax increase either. The substitute budget tweaks the mayor's budget by cutting a little hear and there that total $2 million and gives that money to Metro Schools. Out of a $2.23 billion budget that is not much. Hardest hit in the substitute is the city's Music and Entertainment Economic Development initiative which lost $1 million. $300,000 was taken from the mayor's office budget smaller amounts from other departments. For The Tennessean's report on this story, follow this link

The substitute  maintains the cities commitment to the Barnes Fund for Affordable Housing but moves to fund it contingent upon revenue generated from the sale of two pieces of surplus properties. One of those surplus pieces of property is a park in the Edgehill area and this has already generated stiff opposition.

Once the motion to substitute is approved the budget is then often called "the Council's budget" as opposed to "the mayor's budget."  Once the motion to substitute is accepted then that is the bill before the Council which may be debated. Probably their will be no debate on the motion to substitute. Once the substitute motion is passed Councilman Bob Mendes is going to move to amend the substitute with a substitute which calls for a .50 cent tax hike. Not that it matters a lot but the parliamentary procedure could be that Mendes opposes the Budget and Finance Committee substitute and argues for his own proposal at that point. 

The Mendes fifty cent tax hike would generate about $150 million in new taxes. This would fund the schools request and the COLA pay increases. I adamantly oppose increasing taxes and instead think we should cut waste, corruption, inefficiency, corporate welfare and unnecessary spending. Expect some lively debate. Mendes has four cosponsors for his bill and the influential progressive organization NOAH has endorsed his plan and The Tennessean has endorsed a tax increase.

Despite the support for a tax increase from some council members and powerful allies, I suspect the Mendes amendment will fail. I have no inside knowledge but anticipate the Mendes proposal to get about ten votes.  After the failure of the Mendes amendment, Council will then be back to considering an up or down vote on the substitute budget.  

This is something that most citizens and I suspect even some members of the Council do not understand. A "no" vote on the Council substitute has the effect of being a "yes" vote for the mayor's budget due to that is the way the Charter designs it. If the Council substitute fails then the mayor;s budget is the budget. 

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