Sunday, March 27, 2016

Mayor Barry wraps up most budget hearings. Everyone wants more money

Mayor Megan Barry wrapped up the Mayor's budget hearings  this past week for almost all departments, and it looks like everyone wants more money. The Mayor is yet to hear from the Schools and that is the department of local governments that gets the biggest share of metro dollars.

As reported in today's Tennessean here are the budget increase request from various departments:

  • Police, $12.1 million
  • Metro Hospital Authority, $7.5 million
  • Fire $7.1 million
  • Sheriff, no operating subsidy increase but $20 Million for capital request
  • Emergency Communications, $14.1 milliion
  • Parks, $2.9 million
  • Libraries, $1.9 million
  • Public Works, $3 million
  • Metro Arts Commission, $2.3 million
  • Metro Planning Department, $1 million
That is a lot of additional money being requested and schools will request a lot. After the Mayor hears from Schools and gets any follow up information she might have requested, then the finance department will estimate revenues for the coming year. The biggest source of revenue is the property tax, followed by the sales tax.  Some agencies such as Metro Water operate off of their own user fees. In the case of the water department they are funded by users when users pay their water bill. Some other departments get a significant portion of their budget from federal or state pass through dollars or from user fees.

Once the Finance Department has projected revenues, then the Mayor's office will draw up a proposed Metro Budget.  This budget is presented to the Council, then the council holds budget hearings and may reject the mayor's budget or substitute and pass their own budget. Usually the Council tweaks the mayor's budget and calld the tweaked version of the budget "the council's" budget and substitutes that budget for the mayor's budget.  This then is the "substitute budget" or also it may be called "the council's budget."

There is a lot of confusion about the budget process.  You have no doubt heard council members say they voted against the budget. They often leave the impression that they were voting against a budget that raised taxes. I hate to tell you this but you are being mislead if the councilman left the impression they he was voting against a budget because it raised taxes. When the Council rejects a substitute budget or simply votes "no" on the mayor's budget, the mayor's budget become the official city budget anyway.  That is the way the charter is written.  So, if the mayor's budget would have required a  50 cent tax rate increase and the substitute budget would have required a 42 cent tax rate increase, the effect of voting against the substitute budget requiring a 42 cent tax rate increase is to vote instead for a budget requiring a 50 cent tax rate increase. I don't like that that is the way the charter is written, but that is the way it is and the public ought to know when they are being misled. A "no" vote for the substitute budget before the council is in effect a vote for the mayor's budget.

So, once the mayor presents her budget, the council will tweak it, substitutes the tweaked version for the original mayors budget and pass it. The mayor has already said she will not propose a tax increase this year, but no doubt the council will move a few dollars around in the budget and substitute anyway. They always do.

The current metro budget is $1.96 billion. Without raising taxes, revenue growth will result in a budget that exceeds $2billion this year.  Metro has never said, "we are bring in more revenue than last year, so why don't we cut taxes."  It just doesn't happen.  There is no pressure to cut taxes and there is always pressure to grow government. The mayor has said she will not raise taxes this year, but I am prepared for the mother of all metro tax increases in 2017, unless their is massive outpouring of opposition, and I don't see that happening and really doubt it would change the outcome anyway.

To read the latest from The Tennessean about the budget see, Nashville mayor borrows from 'Shark Tank' during budget process.

To understand why we can expect a major tax increase in 2017 see,  No tax increase in 2016 but look for a whopper of an increase in 2017!

For a deeper understanding of the Metro Budget and the budgeting process  and to see where the money comes from and where it goes see, Citizens' Guide to the Metro Budget.

To watch the individual budget hearing conducted by the mayor and to watch the department heads justify their budget increase request see, MetroGovNashville-Youtube. From the list of videos, find the department of government that interest you or sample a few of the hearings.

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