Substitute budget and proposed amendments
The Metro Council will finalize the annual operating budget at our meeting on June 20, 2023. You can read my May 22 post about the Mayor’s proposed budget here. The substitute budget proposed by Budget and Finance Committee Chair Kevin Rhoten begins on page 487 of the Amendments Packet for our meeting tomorrow. Proposed amendments 1 through 23 begin at page 524 of the same amendments packet.
As a reminder, if the Council does not pass a substitute budget by June 30, the Mayor’s proposed budget goes into effect. As a further reminder, history tells us that the Metro Council typically changes the Mayor’s proposed budget by much less than 1% of the total expenditures.
CM Rhoten’s proposed substitute budget is a good place to start. It uses redlining to show the differences between what the Mayor proposed and what he is proposing.
Like the Mayor’s budget, the substitute budget keeps the same property tax rate as last year. The total revenue and total appropriations are the same in both. That means that any increase in one category of spending must be paired with a decrease in something else. In previous years, there are several usual places the Council will go to first for the “decrease in something else” part of the equation:
Various contingency funds that Finance maintains to deal with unpredictable expenses that come up through the course of the year. Over the years, a cat-and-mouse game has evolved where the Mayor’s budget over-inflates some of these line items and the Council always raids them. It’s hard to figure out how much really is needed for these accounts.
The Council also will typically look to decrease the city’s “Fund Balance” (i.e., savings or surplus or cash reserves) to pay for additional items. But, as I wrote about in my May post, the new Fund Balance policy adopted in January makes taking from Fund Balance for recurring operating expenses impossible. Neither the substitute budget nor the amendments attempt to use additional Fund Balance.
4% fund. The Metro Charter requires the city to set aside 4% of the total revenue for the “general fund” of the “general services district.” This money is used by the city for smaller equipment and capital purchases (like vehicles, books for the library system, etc.). There’s another cat-and-mouse game that has developed over how much this should be. Finance has argued (accurately) that the city’s needs for “4%”-type purchases is greater than 4% of the general fund revenue. So while everyone calls it the “4% fund” because those are the words in the Charter, Finance would like it to be more like 5%. This leads to a budget conversation about how much actually is required by Charter to be appropriated to the 4% fund, and how some Council members would like to use any amounts more than the minimum to fund operating expenses rather than to be set aside for equipment, vehicle, and other smaller capital purchases.
CM Rhoten’s substitute moves about $14.6 million of spending around the operating budget. Here is where he takes money:
Corp Dues/Contributions: Decrease from $1 million to $850k
Judgments and Losses: Decrease from $7.2 million to $2.4 million
4% funds: Decrease from $57.5 million to $54 million
Benefit adjustment: Decrease from $13 million to $8.3 million (Finance likely overestimated the cost of benefits in the Mayor’s proposed budget)
Contingency Utility Increase: Decrease from $1 million to $859k
Mayor’s Office: Decrease from $6.20 million to $6.07 million
NDOT: Decrease from $51.97 million to $50.78 million (likely by taking away unfilled positions)
Here is where the substitute budget spends that $14.6 million:
Increasing cost of living increase for Metro (not MNPS) employees from 4% to 6%: $13 million
Increase the following:
Human resources, by $87k for a total appropriation of $9.2 million
Metro Family Services, by $75k for a total appropriation of $4.4 million
Council office, by $191k for a total appropriation of $3.9 million
Sister Cities program, by $25k for a total appropriation of $95k
Health Department, by $183k for a total appropriation of $37.6 million
Public Library, by $633K for a total appropriation of $42 million
Neighbor to Neighbor, by $45k for a total appropriation of $60k
We-go, by $380k for a total appropriation of $71.9 million
In addition to the operating budget, the budget ordinance also appropriates fund balance surplus funds. CM Rhoten’s substitute proposes modest changes there:
For the $65 million of surplus funds going to MNPS for capital projects in the Mayor’s budget…
CM Rhoten has adopted language I proposed that allows this money to be used for any one-time purpose, not just capital expenses.
He reduces the “Additional Reserve” from $11.75 million to $9 million, and spends the difference on:
$1 million Family Liaisons Pilot Program, and
$1.75 million for One Time Substitute Pay
For the $59.6 million of surplus funds going to Metro for capital projects in the Mayor’s budget…
Of the $7.3 million proposed the Hospital Authority, $60k is moved to Tennessee Justice Center for work they do in the Napier community.
Of the $15 million proposed for Murfreesboro Pike — BRT Construction Planning, $2.8 million is moved to Better Bus One Time Capital expenses.
Now — on to the 23 proposed amendments. The first 5 are co-sponsored by CM Rhoten. We can assume he supports these. I have no idea if he supports any of the others. I’m guessing not, but there might be a few that he supports. For each amendment, I’ll list the main sponsors and offer a brief description:
Mendes, Rhoten. In the unlikely event that Rhoten’s substitute were to fail, this amendment would tweak the Mayor’s proposed budget to allow surplus funds to be spent this year on any one-time expense. I think Rhoten’s substitute will succeed and this amendment will be unnecessary.
Porterfield, Syracuse, Rhoten. This is a technical change to formally allow Finance to spend $500k we appropriated for Planned Parenthood in the last year to be spent in the next fiscal year. This should pass.
Toombs, Allen, Rhoten. Changes the wording in how the surplus funds are spend on arts. Instead of spending $2 million on “Capital Grants for Cultural Support”, the amendment would make it say “Funding for Cultural Support.” This should pass. My commentary is that, while this change may make some people feel better for various reasons, it really shouldn’t. When it said “Capital Grants”, nobody has a plan for how this will be spent or allocated. And after it changes to say “Funding”, we still don’t know how this money will be spent.
Sledge, Rhoten. This tweaks the substitute to formally move the additional $2.8 million for Better Bus into the operating budget (instead of the surplus spending). It is better for this recurring cost of be in the operating budget. I think this will pass. Be aware though that the mechanism to accomplish this is to REDUCE the amount of the Barnes Fund in the operating budget by moving more of their money to the one-time surplus spending. After this amendment, the recurring spending for the Barnes Fund in the operating budget will be $20.45 million and they’ll get $9.55 million this year from the surplus funds. Their total of $30 million remains unchanged after this amendment.
Several CMs and Rhoten. From the MNPS surplus spending, further reduce the Additional Reserve by $6.5 million, and spend that on radios ($1.5 million) and safety glass ($5 million). I assume this will pass also.
Welsch. Reduce MNPD, Sherriff, DA, courts, and certain economic development spending. Increase hospital, Barnes Fund, arts, library, and more. See page 529 in the Amendments Packet.
Welsch. Reduce MNPD and increase arts, library.
Welsch. Reduce MNPD and increase Barnes Fund.
Welsch. Reduce MNPD and economic development. Increase hospital, Barnes Fund, arts, library, and more. See page 533 in the Amendments Packet.
Welsch. Reduce MNPD and increase participatory budgeting.
Welsch. Reduce economic development. Increase Human Relations Commission, Community Education program, and The Village at Glencliff.
Welsch. Similar cuts as in #6, but with some different amounts listed. This amendment would decrease police ($16 million), sheriff ($4.4 million), DA’s office ($1 million), courts ($2 million), and various economics development items (about $850k). This amendment would offer $23.4 million for what I believe would be a 9% cost of living increase for Metro (not MNPS) employees, as well as fund a few other smaller items. See page 536 of the Amendments Packet.
Welsch. Reduce MNPD. Increase fire and EMS.
Suara, Porterfield. Use $6 million of Metro surplus funds to buy Morris building. Accomplish this by eliminating the $2 million in arts spending addressed in #3 above and cutting the amount Metro pays for facility rental ($1 million), 4% funds ($2 million), judgments and losses ($500k), Corp Dues ($250k), and Healthy Nashville ($250k). For most of these funding sources, CM Rhoten already took a lot of money from them for his substitute. I assume we’ll have to debate whether the proposed funding sources for this are cutting fat or meat from the budget.
Suara, Evans. Fund Board of Education salary increases of $76,500. I’m told that would increase their compensation from about $14k to about $23k per year. This is being funded from two of the generic-sounding contingency funds.
Johnston. Proposes to increase the cost of living increase for Metro (not MNPS) employees from CM Rhoten’s proposed 6% to 6.5%. This costs $3.9 million and would be funded from Parks ($1.5 million), NDOT ($1.25 million), General Services ($900k), and Waste Services Transfers ($250k).
Porterfield, Toombs, Taylor, Suara. Proposes to increase the cost of living increase for Metro (not MNPS) employees from CM Rhoten’s proposed 6% to 7%. This costs $7.8 million and would be funded from MNPD ($4 million), NDOT ($1.1 million), Parks ($1.8 million), Codes ($600k), and General Services ($300k).
Porterfield, Toombs, Taylor, Suara. Proposes to spend $500k more on DEI-related positions and programs. The money would come from further reducing the 4% fund.
Styles, Toombs. Spend $25k more for a restorative therapist position with the Metro Action Commission. The money would come from further reducing the 4% fund.
Styles, Evans, Murphy. Spend $40.1k more for a vet tech position with animal services. The money would come from further reducing the 4% fund.
Styles. Spend $90k more for the Mayor’s Office. The money would come from further reducing the 4% fund.
Styles. Increase arts by $500k. Decrease Facility Rental by $500k.
Henderson. Increase arts by $500k. Decrease Dell economic development incentive by $500k.
If history is a guide, the amendments co-sponsored by CM Rhoten will pass. During this term, a united Minority Caucus has been able to pass additional budget amendments too. That said, in the last three years, those additional amendments have largely been fueled by spending from Fund Balance. Since that mechanism is off the table this year, most of the amendments proposed by Minority Caucus members look to be funded by 4% funds or police spending. That’s new ground for this term and I don’t know how that will pan out.
Please pardon any typos.