With representatives from all areas within Metro government gathered in one room, Finance Director Rich Riebeling told Metro department heads Tuesday to explore what effect a 2 percent reduction would have on their budgets.
The 25-minute outing marked Metro’s “budget kickoff,” the first public line of communication with department leaders on an upcoming budget the 2012-13 fiscal year. Mayor Karl Dean is set to present a final budget to the Metro Council by May 1.
“Realistically, if you go much beyond that you’re going to get into a massive-layoff discussion,” Riebeling said afterwards on the cut scenario, which is nowhere near finalized. Historically, the level of cuts introduced during the kick-off is rarely the final number executed in the spring.
“I didn’t see any reason to ask them to do a large number,” he said. “If you look at the cuts we’ve done in departments over the last few years, we’ve eliminated a lot of the excess. Now, you’re really down to pretty slim operations.”
Metro’s operating budget for the current fiscal year is $1.59 billion. In the previous two budget cycles, Dean’s administration elected to restructure, or delay, the city’s debt payments to avoid major cuts.
Metro departments have had to work with less in recent years. Overall, Metro has 670 fewer employees today than it did when Dean took office. Nonetheless, expanding Metro services seems out of the picture.
“I don’t see this as a year in which we’ll see a lot of improvements in budgets,” Riebeling said.
Riebeling made no mention Tuesday of some behind-the-scenes strategizing. Dean’s campaign committee hired a pollster earlier this month to conduct a phone survey that tested the mood of Nashvillians on a potential property tax increase. Metro’s last property tax hike occurred in 2005.
“We’ve looked at it every year, and we’ll look at it this year,” Riebeling told The City Paper of a property tax increase. Dean’s administration, now embarking on its fifth budget, has avoided tax increases in previous years. “We’re going to do what keeps this city moving forward. If we need to address it, we’ll address it as we get closer to May 1.”
By mid-February, Metro department heads are to deliver line-item sheets that detail how a 2 percent cut would be implemented. They’ve also been asked to submit capital-spending requests. Riebeling said this budget cycle he plans to submit a capital-spending plan — used for infrastructure investments, for example — after opting not to do so a year ago.
Riebeling indicated changes could be on the horizon for Metro’s pension and health care plan for government employees. Dean’s phone survey this month motioned a “reform proposal” whereby Metro workers would contribute more to their health care costs and receive lower pensions and benefits.
“Salary costs have remained fairly stable over the last four years, but what you’re seeing is benefit costs continuing to rise,” Riebeling said Tuesday. “The pressure for all of us will be the continuing rise of benefit costs.”
During a slideshow presentation, Riebeling reminded Metro officials the mayor’s office has navigated budgets during a historic recession and following the flood of May 2010: “Through it all, we’ve managed well,” he said.
On a series of slides, Riebeling stressed how the budget dynamics today, following years of economic decline and stagnant revenue, are different than those that predated Dean’s tenure in office.
Between 2005 and 2008, Riebeling said Metro’s tax revenues grew by approximately 20 percent. During the last three years, he said Metro has experienced only a 2 percent overall growth in revenues.
Riebeling said Metro’s property tax revenues increased $140 million between 2005 and 2008, jolted by the 2005 tax hike. Since 2009, he said revenue from property taxes has jumped only $20 million.
Over the last three years, he said sales tax revenue declined overall by more than $30 million, though it did begin picking back up in 2011. Local sales tax collections grew by $36 million between 2005 and 2008, Riebeling said.
“Through these very economically difficult times, and through the flood, I think we’ve maintained the core services of our city,” he said. “We’ve not taken steps backwards, and we’ve actually moved our city progressively forward over the past four years.”