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Should the mayor and Metro Council go for a property tax increase?

A Tax of Conscience



As the Metro Council begins a new term, a prevailing question is whether the mayor and council will propose a property tax increase. As gleaned from recent Republican debates — in between audience outbursts for death penalty body counts, dying Medicaid patients, and gay bashing — we've learned that taxes are inherently evil and that gubmint should be drowned in the bathtub. Assuming similar high-mindedness prevails locally, can we at least acknowledge the results of several years of sequential budget cuts before succumbing?

Ask many Metro department directors privately what it's been like managing their budgets recently, and you get looks that verge on tearful. Annual departmental reductions of 3 to 5 percent certainly seem reasonable. But after multiple years of multiple cuts, the cumulative effect renders some departments nearly unrecognizable.

Take public works. There was a time when it provided the public with ... well, works. Services the public presumes are still there but really aren't. Things like alley clean-ups, vacant lot and right-of-way maintenance, three-year paving cycles, sidewalk improvement schedules, bulk item removal, frequent brush pickup and chipper service, in-house engineering services, and an assortment of chocolate confections.

OK, I might have imagined one of those. But the point is that after year upon year of cuts upon cuts, those services — and the people who provide them — are gone. If asked for reductions again this year, Public Works may forgo a formal budget and simply submit a suicide note.

This cumulative effect is mounting for other departments — parks, codes, libraries, etc. — each of which concedes declining services. While modest reductions are touted as "prudent fiscal management in tough economic times," death by a thousand cuts is still death. And because incremental cuts rarely make headlines, the public remains oblivious to vanishing services.

The perceived exception is Metro schools, because of the mantra — repeated mindlessly by successive mayors and council members — that schools are "fully funded." What goes undisclosed is that, in an advance pas de deux, the schools director is told what to ask for. (Remember Henry Ford's offer of a Model T in any color you wanted, as long as it was black?) If Jesse Register could really get full funding, don'tcha think he'd ask for enough to replace tattered, duct-taped 13-year-old pre-calculus textbooks and leaky roofs?

Because department budget reductions typically come with instructions to cut in areas less noticeable to the public, a "ghost effect" emerges, wherein community centers and libraries remain open, but maintenance and staff get cut. This works for about 45 minutes. Eventually, the public notices a department's inability to function as advertised. Storm debris sits in front yards for months. Or we fail to adhere to our own standards. City policies require, for example, that at least 70 percent of our streets be maintained in "good or better" condition. In 2008, we scored just 78.6 percent. In 2009, that fell to 77.5. Last year, we dropped to the lowest level allowed — 70 percent. We score better on TCAP tests.

And it's likely to get worse. Last year, $20 million was the recommended minimum funding for street improvements. We coughed up just $4 million, to no one's satisfaction (with the possible exception of the shock-absorber industry). Add the fact that Metro employees have been asked to do more with less, haven't seen a pay raise in half a decade, and have watched earnings depreciated by higher health insurance costs and inflation — and it's a gloomy picture. If Metro had a morale officer, he'd be on Paxil.

Current tax revenues must also withstand capital expenses. Last year, we essentially refinanced our credit cards. Debt payments averaged $140 million, so we reduced those payments to just over $80 million with a quick call to the boys over at Goldman "We Haven't Been Indicted — Yet" Sachs and JP Morgan (of the "recently settled with the SEC" Morgans). But check the fine print. In two years, our payments shoot back to $140 million, then in four years skyrocket to $195 million. (In the meantime, we still owe annual sums to the Titans, the Predators, and don't forget the convention center. Last year, we collected $23.6 million in hotel occupancy taxes. But to avoid tapping reserve and surplus funds, we need that number to be $33 million.)

End runs around a tax increase will be increasingly difficult to deploy. The four-year property reassessments are typically used as an opportunity to raise revenues. But the property assessor's last appraisal in 2008 noticeably irritated the public. Home values were appraised dramatically higher, prompting allegations of a de facto tax increase. Now, after three years of a slumping housing market, a sequel by "The Adjustment Bureau" seems unlikely.

And in 2006, Davidson County voted to require referendum approval of future property tax increases. Though a few observers (including then-Metro legal director Karl Dean) opined that the requirement is unconstitutional, a tax proposal would still require either a) seeking referendum approval, or b) a legal challenge to the public's expressed preference. Because both options can be filed under "Career Enders," don't expect either.

So, to recap: Looming on the horizon are massive debt service obligations, deferred maintenance issues and declining city services. And each, ironically, will only perpetuate anti-government sentiment. One thing is certain: I feel sorry for the next mayor.


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