Vice Mayor Shulman, President Pro Temp Syracuse, thank you for joining me in the Metro Council Chamber today.
To all of you watching this at home – Members of the Metro Council, my friends, and all residents of Nashville -- this is an unprecedented time for our city. This empty chamber exemplifies that. Today is the most unusual State of Metro speech in our history. I am talking now to the Councilmembers who are not here – who are appropriately following social distancing – and to everyone at home.
Our community is connected even when we have to stay apart. This chamber may be empty, but our hearts are full; our resolve is strong.
I want to talk about the three major challenges before our city. We face the challenge of rebuilding after a devastating tornado. We face a pandemic unlike anything we have seen before. We face perhaps the most sudden and sharp recession in American history. And Metro was already facing financial challenges: an unbalanced budget, thin cash balances, mounting debt payments, and unmet needs.
Two of the four or five worst disasters in the 238 years of Nashville history happened this very month. The tornado destroyed or damaged 2,242 structures, including 3 metro schools. Now COVID-19 has emptied our classrooms. Our streets are quiet. Many businesses have temporarily closed. We all know people who are now out of work.
This may well be the greatest set of challenges Nashville has ever faced. These are hard times. But we will get through them. And we will be a greater city. We will find solutions and move forward together.
To the Council members who would normally fill this Chamber, and to Metro employees serving the city every day, these crises remind us of why public service is important. City government is the first responder and the last resort. Metro will always show up. We will always take care of our neighbors. We don’t always have the most resources – but we do have the most will. We’ve shown that this month. And we will show it in the months ahead.
This is a city that shows up to help neighbors after a storm and knows to stay home to keep neighbors safe during a pandemic. We are going to be a stronger city on the other side of this.
Now these challenges – a tornado, a pandemic, and our troubled finances – do not come at an easy time. Even before the tornado and COVID-19, Metro faced difficult issues. We have a shortage of teachers and first responders. Our children need new textbooks, and social and emotional learning. Many residents lack affordable housing. We need more sidewalks, safer intersections, and a better transportation system. And our future requires sustainable financial management.
These are the topics that I had hoped to talk about today, and the investments that you on the Council and I, as Mayor, had planned to make in this budget. I know we will tackle these issues together. We must and will address them. The needs haven’t gone away. My commitments have not gone away, but we must get beyond the crisis at hand.
First, The Tornado
Less than a month ago, while Nashville slept on the night of March 3rd, a category EF-3 tornado touched down in Bells’ Bend and cut through Tune Airport, North Nashville, Germantown, East Nashville, Donelson and Hermitage.
Two people lost their lives here in Nashville. We join the friends and family of Michael Dolfini and Albree Sexton in mourning their loss. The storm claimed another 23 lives in Benton, Wilson, and Putnam Counties.
I will never forget that night: driving through the devastation in North Nashville to arrive at the shelter at the Farmers’ Market in the dead of night. Talking with the mother who managed to grab a pack-and-play before scrambling out of her building with her baby. The families cared for by volunteers while they huddled with their dogs. As the morning dawned, people came together.
Residents of North Nashville, East Nashville, Donelson, and Hermitage organized to take care of each other. Churches played a key role in bringing people together. One church, Lee Chapel AME, didn’t have electric power, but it had its pastor, Representative Harold Love, who was there leading the response with many, many, many others including Deputy Mayor Brenda Haywood. Throughout the day and in the days that followed, hundreds of volunteers converged on Lee Chapel, bringing food, supplies, and offers of
help and hope.
That week, more than 26,000 individuals signed up to volunteer with Hands On Nashville. That’s 4,000 more people than volunteered in the 8 months following the 2010 flood. Never has Nashville stood stronger.
First responders, Public Works employees, Nashville Electric Service workers, Hands on Nashville volunteers, community and faith partners, and thousands of everyday Nashvillians restored life to the city. What they did is nothing short of heroic.
Since March 3, earlier just this month, Metro crews have cleared 116 blocked roads and 60 alleyways, repaired infrastructure at 335 intersections and 72 traffic signals, removed 5,128 truckloads of debris totaling over 239,000 cubic yards, and restored power to nearly 50,000 homes. All in less than a month.
The work of recovery continues. I want to thank the 21,414 donors who have contributed over $9.9 million to date to the Community Foundation of Middle Tennessee. The Community Foundation has made grants to 42 nonprofits in Davidson County to help with tornado recovery efforts, including Hands on Nashville, Lee Chapel AME Church, Gideon’s Army, the Martha O’Bryan Center, the Donelson
Fellowship, Rooftop Nashville, and Need Link. They will continue their vital work in the months and years to come.
There is still a great deal of work to be done. Many residents have been displaced. There have been reports of unscrupulous speculators trying to take advantage of people in their time of crisis. Let me be clear, that is not Nashville Strong.
For those of you who still need help with shelter, food or utility payments, please know that my office has been working on these issues. You can dial 2-1-1 to ask for help. The Metro Action Commission can help with rent, mortgage, and utility payments. Call 3-1-1 or go online to Hub Nashville for other resources. FEMA is still accepting applications for relief as well.
Our neighborhoods are resilient. After the 1998 tornado, St. Anne’s Church in East Nashville etched a
quote in stone that reads, “God was not in the tornado, but in our response.”
We see that response now at 624 Jefferson Street, the decimated building that housed Music City Cleaners and the Lab. There, Joshua and Tabitha Munday have already put back three beautiful murals, one of which depicts their son Zion in front of a circle of community residents, one wearing a sweatshirt that just says, “Love.”
That is “Nashville Strong” in action.
Our neighborhoods now face yet another challenge – the coronavirus. Churches that brought people together in recovery are now adjusting to worshipping remotely. Restaurants and bars, playgrounds and barbershops, schools and music venues – places of coming together – are now temporarily closed.
And Then, The Second Challenge: The Virus
This is the great challenge of the current moment – the reason this chamber is empty today.
We acted decisively to meet this challenge. On March 15, at my direction, the Metro Board of Health issued an order closing entertainment venues. I also formed a Coronavirus Task Force and asked Dr. Alex Jahangir, the head of the Board of Health and, also, a surgeon at Vanderbilt, to serve as Nashville’s coronavirus response coordinator.
One week after that, as the threat grew, I issued the “Safer at Home” order, directing people not employed in essential occupations to stay at home and not gather in groups for 14 days. The purpose of this order was to slow the pace of the pandemic and to prevent our hospitals from becoming overwhelmed.
Yesterday, the State joined us in issuing a Safer at Home order. And today, in consultation with public health authorities, I am announcing that we will be extending our Safer at Home order through April 24, consistent with the statewide schools closure.
Although these are still early days, I am encouraged by Nashville’s response to the Safer at Home order. People are observing social distancing and it is making a difference. What we are doing now will save lives.
Make no mistake: Just as the Greatest Generation met their challenges, we will meet ours.
Quiet heroism is everywhere. Metro employees continue to deliver vital city services: picking up trash, responding to emergencies, caring for our most vulnerable. I thank all of you for the work you continue to do.
To the grocery store clerks, the bus drivers, the warehouse workers, the food preparers, and delivery people, thank you. You are part of the frontline of the great fight of OUR time.
Finally, to our health care providers. We thank you for your work during this difficult time. We have an obligation to try to help you – by practicing social distancing and following public health guidelines. The fastest way to move beyond this current crisis is to limit the spread of the coronavirus. Flattening the curve will get people back to work sooner.
Nashville is fortunate to have so many great hospitals and healthcare systems. Their partnership with the city has and will continue to be a vital part of our response. I particularly am grateful for their help staffing our COVID-19 Assessment centers. Their collaboration with our Office of Emergency Management is Nashville at its best.
If you suspect you have symptoms of COVID-19, please call our hotline at 615-862-7777. They will direct you to medical care or to an assessment center, where screening and testing are free.
Stay home. Practice social distancing – stay 6 feet away from other people, avoid gathering in groups. As
Dr. Hildreth, the President of Meharry and a budding TV star, likes to say, “Don’t be a vector.”
And Now, The Financial Challenge
Unexpected disasters such as the tornado and COVID-19 are why cities have rainy day funds. Unfortunately, Metro Government doesn’t have a rainy-day fund, and instead, actually thinned its cash balances. Our lack of a rainy-day fund has left us vulnerable in what has become a stormy season.
During last year’s campaign, I talked a lot about fiscal stewardship. Finance is the foundation of everything a city does. I was worried about our thin cash position and other financial weaknesses. In our first months, we made great progress in stabilizing our finances.
In the fall, the State Comptroller called on Metro to balance its budget, build up our cash balances, and institute a policy for sustainable cash management. We responded by balancing our budget, finding new revenue, and making painful reductions to our spending. New revenue included $12.6 million from the Music City Center and $3.6 million from the Nashville Convention and Visitors Corporation. These were great steps toward tourism benefiting residents throughout the county. I’m hopeful of more opportunities
like these when the coronavirus pandemic passes and tourism returns.
Our Chief of Operations & Performance Management, Kristin Wilson, is already working on opportunities and she created Metro’s first performance management team. Finance Director Kevin Crumbo put Metro on the path to establishing a comprehensive cash management policy and a structurally balanced budget. Department heads have welcomed and contributed to these efforts.
I expected to be here today with the budget to put our fiscal house in order and invest in our neighborhoods – in our schools, in transportation, in affordable housing, in public safety, and in environmental stewardship. Then came the unexpected: the tornado and the coronavirus pandemic, and with them a new set of challenges and financial uncertainties. And now we have a new priority — to get through this — to manage resources, save lives, protect and serve people, support employees, and provide comfort, care, food and shelter.
The tornado hit first, putting pressure on our city’s operating and capital funds. The city has an excellent insurance policy. We are hopeful of relief by FEMA for costs that insurance does not cover. But, making insurance claims and applying for FEMA relief is a lengthy process. And it’s worth noting that it took 8 years for Metro to receive its final reimbursement from the 2010 flood. And, not every cost will be
eligible for reimbursement. We cannot delay. We must serve our people, now. That means we must spend our own money, now, to invest in rebuilding our city.
The financial impact of the coronavirus will be far more serious. Last week, unemployment claims in Tennessee increased by 1,300 percent. Our local economy – and, with it, Metro’s revenues – are falling dramatically. What is true for you is true for the city, too. This is an uncertain time.
The Finance Department estimates that for the remainder of this fiscal year, ending June 30, revenues from sales taxes and other activity taxes will be down between $200 and $300 million. And that estimate is just for the fourth quarter of this fiscal year. And there is an unknown impact on next fiscal year.
This shortfall requires immediate action. With this uncertainty, our first concern must be in maintaining the delivery of essential services by Metro government – to protect our police, our fire, and our basic services. That requires financial stability. Tough decisions are required in the weeks and months ahead to get us through this crisis and give us a better future.
We are already taking steps to shore up our cash flow. Last week, Metro announced a hiring freeze,
except for public safety and other critical services. There will be no promotions or pay raises. All travel is on hold. I have directed all departments to identify immediate cost reduction opportunities. We are
delaying non-essential capital spending.
These actions will reduce city spending by millions of dollars. But unfortunately, these steps will not be enough to cover our revenue shortfall. We need to find hundreds of millions of dollars in savings and in new revenues, just to keep us where we were.
Now, we had plenty of financial vulnerabilities before the tornado and the virus. Let’s review some of the
challenges we started with.
First, as is well known, our city did not have the cash balances that we should have had. After years of spending down our cash, we will need more than $100 million to bring our fund balances up to just 5 percent of expenditures. This was before the virus dramatically reduced city revenues.
Second, as is well known, debt service payments have been rising sharply. Debt has dramatically increased on a per capita basis over the last several years and that in turn has required a greater and greater share of our revenue. Next year we must add an additional $40 million to cover that increase.
Third, as is well known, Metro has relied on non-recurring revenues to match recurring costs in recent budget years. It has used fund balances or projected proceeds from one-time asset sales, that might not even happen. The use of this one-time money in last year’s budget, including spending down reserves, was roughly $70 million. This is not sustainable. That money must be replaced. Our recurring revenues must match, or be greater than, our recurring costs.
These already difficult financial issues are compounded by the virus-related slowdown. Sales taxes represent just under one third of our city’s tax base. So, a sharp decline in sales taxes makes us more reliant on our other revenue sources. Fees will also be going UP to help cover our basic costs. I’m happy to announce today that the Music City Center has agreed to contribute an additional $35 million, on top of its payment in lieu of taxes. But even these additional measures won’t be enough to meet our needs.
The fiscal quarter that starts tomorrow and the year ahead will be extremely challenging for Metro Government. We cannot cover such a shortfall by just cutting services. We will be forced to use cash balances that are already stretched thin to ensure continuity of essential services.
Let me be direct. The budget ordinance that will be filed with the Council in April will sharply increase the property tax rate from its current historically low level. The final amount will be determined with the best information available, but it will be substantial. This is something we have to do.
By April 28, I will submit a formal budget to the Metro Council. Between now and then, my Finance Department and I will continue a thorough review of every option to make our city fiscally sound. We will consider every cost-cutting opportunity, turn over every stone, and look beneath every seat cushion.
If money from the future Federal response – for the tornado and for the virus – is so robust and becomes so timely that we have more revenue than we anticipated at some later date, then all to the good, we can adjust.
But our responsibility is clear. We have to file an actual balanced budget – a budget that gets us through this crisis safely to the other side. Metro must balance its budget, just like businesses and households balance their budgets. Our budget has to be submitted within the next month — with the best information available – the very same month that we have to get through the shock wave of the pandemic. This is no time for avoiding unpleasant realities or gambling with the city’s future. We must ensure that we have the resources to get us all the way through to the post-virus Nashville.
Metro’s finances are in a place where there is no option. We can’t print money or borrow to cover our operating expenses. We must raise property taxes, as difficult as that is right now. You are the shareholders of the city and this is my report. This is what we have to do to get safely to the other side.
So, In Conclusion
This is not a budget message, as much as it is a statement of principles. Through careful financial stewardship, we will meet today’s challenges and build a greater city on the other side. And I’d like to note that even after a property tax increase, we will still have a lower tax environment than our peer cities. That should be a source of pride to us all. Our resilience will set the stage for our future growth and prosperity.
In the current moment, stewardship means preserving essential services by stabilizing our finances. But once we get beyond the tornado and the pandemic, the stewardship we show today will provide the platform for our future.
We will not lose our vision. This is a season of challenges. But the time will come when we can invest again. And when that season arrives, we will move. We will move forward with plans to make our teachers the best paid teachers in the state of Tennessee. We will have a new transportation plan with solutions for every neighborhood. We will implement a 10-year affordable housing plan. We will have fully staffed fire and police departments, and we will have body cameras.
I’m optimistic enough to see that we will get back to having traffic problems in a few months. Visitors will come back to downtown. Our growth will continue. Our ability to respond to two simultaneous emergencies will confirm Nashville as a place where people want to put their future.
The need to make Nashville a city that works for everyone is more urgent now than ever. Believing in Nashville is not a leap of faith. This city – and our country – have the resources and talent we need to build a better future for all our residents and all our children.
Metro’s entire Emergency Operations apparatus has been heroic in responding to two states of emergency. Thank you for the sacrifices you and your families are making in spirit of true public service.
Thank you, Nashville. Be safe. Take care of your families and neighbors. Getting this right can save thousands of lives. We’ve got to meet this challenge. We’ve got to and we will. Nashville’s best days are ahead of us. Nashville will take care of each other and, together, we will build a city that works for everyone.
My thanks to the Council as my partner in this great work together. I know that we — as a city — have the courage and the faith to see us through.