Karl Dean knows he has some sales work to do.
Nashville, like many cash-strapped cities across the country, has put off any number of decisions, plans and projects during the recession. After deferring the city’s debt obligations for two years, dipping into the “rainy day” fund and holding the line on the budget, Dean has proposed a 53-cent hike to the city’s $4.13 tax rate — an overall 12.83 percent bump, just pennies under the amount that would trigger a referendum, to raise $100 million in new revenue.
But any tax increase will not be easy to pass.
At a meeting with City Paper editors, Dean pled his case, painting a fairly dark picture of what kinds of cuts would be needed without a tax increase.
“We’re at a point now, if we cut further — and we are actually eliminating about $3 million from operating budgets — to the level you would need to cut and not have a tax increase, you would be talking about cuts that would definitely go into muscle,” he said. “We’d have to lay off 200 police officers, 200 firefighters, 200 teachers, close all the branch libraries, close all of the community centers. And you still wouldn’t be there.
“Either you go backwards, where you set the city back in terms of quality of life as an appealable place to live, or do you go forward. I’m not willing to turn back on public safety. I’m not willing to turn back on education. I do believe that we’ve made real progress in both of those areas.”
As he began the work of selling the tax, we talked with Dean and finance director Rich Riebeling about the budget and a range of issues affecting Nashville right now.
Total, there’s about a $3 million reduction in department budgets along with the tax increase. How much thought did you give to raising the tax 3 cents more [to 56 cents] and go all the way to the limit before it would have triggered a referendum?
Dean: One of my goals was, and this is the guiding principle of my first term because of the recession, I thought it would be totally inappropriate to raise taxes in the middle of the worst recession since the Great Depression. It would have been just taking money away from the public and putting it in government’s hands when the public is hurting. We’re still not fully in a position where I would say the economy is as strong as we’d like it to be. Unemployment here is 6.6 percent; we’re well below where we were in 2008. We’re a point-and-a-half below the national average. I wanted to keep it as low as I could.
Every four years property is reappraised, and that will happen again next year. Do you factor in how that might change what people might be paying then (i.e. less because of a drop in the real estate market) and calculate a property tax rise based on that?
Dean: As best as you can, because it’s all guesswork now as to what will happen next year. I will say that the situation next year is probably looking different than at any point in Metro’s history. Generally you could bank on housing prices going up. Nashville has been much more stable than most major cities, but I can’t say with absolute certainty that Nashville housing prices are going to go up, and I can’t say that they will go up to a degree that it will give us a lot of room or comfort [in the budget]. We thought about that, but it wasn’t a major consideration.
Only five of the 40 council members have ever voted on a tax rate change.
Dean: It’s like Garrett, Steine ... the ones that have come back from other lives.
I think you started making the case to the council yesterday. How do you continue to make that?
Dean: I think it really comes down to what I said. It’s kind of a crossroads decision. And to me the choice is just so stark. When you’re talking about cutting $100 million out of the budget, there’s just no easy way to do that. I mean, if you do it, you will literally be ... People say you’re using scare tactics when you talk about cutting teachers and police, but we’ve cut everything else. Since I’ve been mayor, we’ve cut 59.2 million out of the Metro budget. There are over 660 fewer Metro employees than when I started.
I’m sure there are things you can go in and find that have to go, but there ain’t $100 million. And there ain’t $20 million. And there ain’t $10 million. And so, it’s really a decision about how you see the city. It’s a decision about whether you just refuse to raise taxes because of some sort of anti-tax position in any situation, or whether you bet on the future of the city. I think Nashville, when you’ve got a choice of going back or betting on the future, you always bet on the future. And so, the choice was easy for me, and I think it’s pretty clear to most. I don’t think there’s any easy answers, saying, “Just don’t do it because we don’t want to raise taxes.” The other thing people have to understand is that local government is different. It’s not like the federal government in the sense that we can’t print money. We can’t operate at a deficit. Through the reappraisal process for our most basic foundation of financial support. And we have to periodically make those decisions. And cities grow. And the best example I give is what I said about schools — and this is a positive thing — but enrollment in our public schools goes up every year now. And you can’t just say, “We’re gonna get by with the teachers we’ve got.” You can’t.
Let’s talk about two specific capital items. You talked about the purchase of land to expand Julia Green Elementary. Is that just for the land or is there money budgeted for expansion?
Dean:The plan is to put money in for land acquisition. I’ve got something to say about it, but these are school recommendations about where their needs are. For instance, with the high schools, they rank them, and they have a number they can put for each school and what the priority is. Stratford (which would get a $20 million makeover) was No. 1.
Two years ago we budgeted maybe $10 million for that East Nashville Highland Heights building, which didn’t get funded. Now it will be $16 million. Is that going to be in the capital plan?
Riebeling: Probably so. There’s a couple of projects like that. Highland Heights was originally going to be something they restored and [they would] renovate the original building, and it was determined that wasn’t a feasible figure. We’re gonna preserve part of the building and build new around it, so the cost has gotten higher than what the budget originally was. It was originally kind of a [guess], but now they’ve got detailed plans, they can firm the number up. Highland Heights is more than just a school. If you talk to the neighbors there and the councilman, that’s seen as kind of a historic and central point for the community. That area’s going through a real interesting revitalization right now. You’ve got restaurants over there right now. You’ve got a mix of everything. I think for that community — and [charter operator] KIPP will lease the building — it’s seen as not just a school but as a statement for the community for them to meet and play. There will be open-space areas. It’s more than just a school; it’s a central point for the area.
Dean: And the arrangement is — and this gets lost in all these discussions — KIPP is a public school. It is paid for by public dollars, and there are public students attending that school. Some people like to shade that, but that’s the facts. The deal was, and this is no criticism of anybody there now and I don’t know how it happened, this was a situation like Turner School, where you had this building where the schools abandoned it, essentially, and left it on their rolls, and they don’t do anything with it. And then when KIPP Academy comes to Nashville and becomes a public charter school, they put them there. And two-thirds of the building is uninhabitable. When I first saw it, it bothered me to see what I saw. We’re left then with this school that’s two-thirds unusable, a public school that is succeeding beyond expectations, a fixture that is important to that neighborhood, and you’ve got to make a decision about what you’re going to do. The schools did not have an interest in upgrading a thing for a public charter school, which is one of their schools. I did. I think that’s the right decision.
The average person hears about a tax increase and says, “We’re building this giant Music City Center” and doesn’t realize that they’re different pools of money. Is that a challenge to get across to people that this $585 million project isn’t tied to the increase?
Dean: Look, I’ve been preaching that for 4 1/2 years. The first question I got after my [State of Metro] speech was, “How are you going to explain the convention center?” Kind of my answer is that a lot of the obligation is on the media. I mean, the fact is that there is not one bit of property tax that has gone into the construction of that building. Not one cent. I guess, other than the time I spend talking about it and working on it, whatever goes to my salary.
But the financing model that we did — that builds the thing using the hotel/motel tax, and then the tourist zone will kick in at its completion — has worked beyond our expectations. We didn’t get credit for it at the time, but we were using very conservative estimates. We’re $11 million exceeding our revenue collections right now, and the center hasn’t even opened. As we’re speaking, the Omni is being built by Omni. Another hotel is being built on West End, and there will be another hotel built downtown in the next year or two. That’s just the facts. I’ll keep repeating them. But that has nothing to do with property tax. And if somebody says it in a public forum, you oughta call them on it.
One of the things when Music City Center was pitched was that there would be some sort of redevelopment of the current convention center, and the Medical Mart project was put forward. Music City Center is a big hunk of our skyline now, and there’s nothing done with Med Mart. How much longer before we see real progress on it?
Dean: A couple of things ... Med Mart is basically where it’s been in the sense that they have to sign enough leases to make it a financially doable deal for them. The city has no agreements with them. No anything. So we don’t have to do the Med Mart. I can tell you that there is a lot of interest in that property from a lot of different businesses. It’s some of the most valuable property in the city, and of all the things that keep me awake at night, worrying about if we’re going to be able to successfully develop that corner is not one of them. I can tell you that another consideration that needs to be discussed is that we need it for a convention center for a while. We cannot legally say we’re not going to use it as a convention center because we’ve got an agreement with the Renaissance Hotel [adjoining the current center] that we’re going to operate a convention center for some time. For us to do anything is going to involve resolving that issue. And we’ve got conventions booked beyond the opening of the new convention center.
I don’t feel the pressure. I feel that because the economy has turned, and Nashville’s kind of a hot city right now, we’re getting lots of inquiries and there’s lots of possibilities, and for us it’s just making sure what the right thing is.
It sounds like you’re open to other things besides just the Med Mart.
Dean: The bottom line is we’re going to do the best thing for the city of Nashville, whatever road we go down. I believe that the Med Mart folks have a good concept, but at some point you have to execute. I don’t feel cornered in. I really don’t.
When is the point that they have to execute?
Dean: It’s pretty flexible. What I mean is, we don’t have an agreement. I don’t have to do anything other than find the deal that makes the most sense. There are a lot of people that might be interested if we do A, B or C to help them get interested, and we might not want to do those things. And the Med Mart is a great idea. It would be a transformative thing for downtown if it happened. And there are other things that would be appealing, too. We’ve agreed to give them time, and we’ll just see how it goes. But like I said, we have an obligation to run a convention center for some time, and we can’t go off and start tearing down that building this year. It would be legally wrong, and we’ve got parties coming in for conventions.
On the back side of the arena, there’s been talk of a small entertainment district there.
Dean: I think the Predators would acknowledge, and I certainly think, that’s going to be transformed. The back of the Bridgestone ... I never think of it so much as the back entrance as “where you go to smoke.” That clearly is now at the key tourist intersection of the city, because you’ve got the convention center, the hall of fame, the Hilton and [the arena]. And, in time you’ll see that being activated in some way with retail, restaurants and stuff like that. That whole wall going up Fifth Avenue will be activated in time. There’s no real immediate plans to do that, but that’s what will happen. Fifth Avenue itself as part of the convention center project will be transformed. That will be a wholly different street a year from now. And then there’s also work being done with the avenue of the arts. Things will happen at Bridgestone, but there’s nothing on the drawing board right now or no plans.
You mentioned fielding calls from other cities and people checking out Nashville and how hot it is. When you’re fielding those calls, do you ever hear, “Gee, we’d love to come down, all this social agenda legislation is worrying us.” Do they ever say, “What the hell is going on with the legislature in Tennessee?”
Dean: I won’t mention names, I’m not really at liberty to mention it, but there have been companies who have actually come here who have heard about some of the social legislation and expressed concern. My position has always been, particularly in the area of nondiscrimination, that that absolutely shoots us in the foot. Particularly if you’re a cultural city and an artistic city and a university city. I think Nashville stands on its own. I think people look at Nashville and know that it’s different. Cities have to be friendly, which we are. Cities have to be inclusive, which I think we are, and we try to get more and more inclusive. That’s the way government in cities should operate. But I have heard it. The business [in question] came.
Tennessee has been hemorrhaging jobs in the film industry to neighboring states that have incentive plans. There are anecdotal stories of Nashville residents packing up and moving to Georgia and Louisiana where the movie work is. Since the state is not going to provide any
of these incentives, is there anything Nashville will do to lure this work?
Dean: One of the things that this music council that we’ve formed has looked at is how we can do more work with doing scores for film. And I think that’s a real possibility. I’d love to see more film here. We just had a company that was filming a pilot here that I guess we’ll find out this coming month if it’s been picked up by one of the networks. It’s called Nashville. There is film work done here. And obviously Nicole Kidman has done some things. The film festival has grown here and FilmCom has grown here.
But if you look at incentives, I guess Louisiana would be the most aggressive one and probably Michigan and the Detroit area, they’re giving cash. It’s pretty expensive. And it’s a tough competition to enter. I would like to see it more here, and part of what we can do here is work to strengthen the music industry, which I think draws some creative people here. And it draws people who are interested in film here. The universities help, too. As a city, we’d be hard-pressed to compete with Louisiana, Michigan and New Mexico with what they do writing checks. I don’t think as a city we can do it.
Some of the items in the legislature that were sponsored by the Nashville Area Chamber of Commerce would have essentially gutted some of the city’s zoning abilities. Before the city gives the chamber a $300,000 subsidy in the next budget, have you gotten assurances from them that they won’t put those forward again next year?
Dean: I think they would view that [amount] as payment for services rendered. I think I made my displeasure with the chamber’s position pretty well-known. We’ve had some pretty frank discussions about that, and I’ve been assured that I or a representative from my office could be present to talk whenever there’s any sort of legislation that they’re taking a position on that affects Nashville. I don’t think they deliberately set out to ... I think it somehow fell into a crack, and then it kept going, and then it got a momentum of its own. And it was really problematic. It would have been devastating to local governments all over. The opposition to it was total from every major city in Tennessee and the Middle Tennessee Mayors Caucus. We did a very strong letter saying, “Stop.” I think the chamber’s aware that if we’re going to be partners, we’ve got to be on the same page on a lot of these things. Or at least we’ve got to have a discussion before they go off and do it.
I will say that I support the chamber getting the $300,000. It’s in the budget. It really is to pay for the work Janet Miller and the economic development folks do in bringing us prospects and to give the message of Nashville. They do a good job at it. Part of the reason I was as outspoken as I was about this is that my track record with the chamber has been … that I think, in general, they have been fairly progressive. I don’t agree with them on everything, and there’s certain things I’ve done that they don’t agree with, but I think there are very few chambers of commerce that make their No. 1 priority public education. They haven’t just talked it, they put money into it. They’ve put work into it. They’ve rallied other sources of money in the private sector to help. They’ve been a good ally in all that. I think they’ve been very thoughtful about issues around transportation, too. Their vision of Nashville, I thought, has been far different from the vision that was articulated by the bills that were filed. And it’s not just big cities, it would have been small towns that would have been adversely affected.
Along those lines, there has been some concern from parents that the academy programs in public schools are little more than glorified vocational training. Is the ultimate goal of the public school system to create an enticing workforce?
Dean: No. I mean, I don’t have the list of all the different academies. They cover all different subject matters. The last one I visited was I was at the ribbon-cutting for an academy at McGavock [High School] that Country Music Television was a real big sponsor of that teaches advanced TV skills. There’s a great academy at Pearl-Cohn that basically does a news station. They’ve gotten great contributions for it. They still teach the traditional subjects. You still have the traditional college courses. I think it’s important to have IB [international baccalaureate] programs. It’s important to offer those choices to the parents. You clearly still have the magnet schools, too. I think the goal of Metro Schools is for all kids to go to college. Now, that’s not possible, but the goal is not to channel them off into some kind of vocational training. I would reject that. I think that one of the things we do have now is this open enrollment, where you can go to any school you want to. I’m a great believer in a general education, and that’s what I would want if I was a young person. They’re making the choices. We got a grant from the National League of Cities to work on alternative high schools. We created two recently, and we’ve got a new one coming this year that gives kids who aren’t going to succeed in a traditional high school — they’re going to be dropouts — to give them another type of school to go to so they can get through school. You’ve gotta have all different types of schools, because one size doesn’t fit all.
I’m sure you saw the state bill that would allow the state to have an entity that would oversee the state fair.
Dean: I think the issue is, and what we’re agreeable to and what the [Metro] council did, is to have this planning done that we’re in the process of doing. And I think that should occur. My point is that the state fair is great, but you’ve gotta have a way to pay for it. This is the first year where we’re at where we thought we’d be. At some point, we’ve gone through all of the reserves. Over the last 10 to 15 years, we’ve spent every bit of the reserves. It’s all gone. So now there’s a supplement in the budget this year. We’ve fully funded what the fair board wants. I’m not hostile to the fair. But the reserves are gone, and the money that will now supplement that will come from the general fund. One of the issues is that if there’s going to be a true state fair, maybe there should be some help to pay for it to turn it into a true state fair and not have something that’s not a state fair. But that bill is totally separate from me. I’ve kept totally separate from that.
The governor just vetoed the Vanderbilt “all-comers” bill.
Dean: I thought that Gov. Haslam, the opinion he expressed I share with him. I couldn’t express it any better than him. The legislature shouldn’t be telling Vanderbilt what to do. Vanderbilt can figure out if what they did was right. It’s a private institution. I think he was correct to veto it.
We hear rumors about you and higher office ...
Dean: I think I’ve got a great job and I’ve got 3 1/2 years to go. There are a lot of things I want to get done, and it will come to an end, and I’ll miss it terribly.
Are you ruling out a statewide run for anything?
Dean: I really am not thinking about it. I’m so busy with what I’m doing. There’s all sort of life decisions that have to be made about your age and family. I’m just fixated on getting this job done.
There’s a number of charter school operators who have expressed an interest in Nashville. Some critics have said this might lead to a different type of segregation for Nashville. What types of assurances are there that a charter program is not going to undo some of the things that have been done over the past 40 years?
Dean: I think first of all, any charter school, because it’s public, has got to welcome and encourage diversity. It’s got to be a school that makes an effort to attract all types of students. So far, the history charter schools in Nashville is that charter schools have gone into areas where there’s the most need for a change in educational philosophy. The charter advocates I’ve talked to, for instance, like Geoffrey Canada — he did the Harlem Project — he’s a huge believer in charter schools. He came to Nashville before they reformed the laws, and I said, “We need to get you to the state legislature.” I said, “Hear from this guy, because he knows more about charter schools than anybody I’ve met.” He went and talked to people. The other source I would really say really got me in favor of them was Arne Duncan, the secretary of education in the Obama administration. They made it clear that they were not going to aid school districts and states that didn’t reform their charter schools and offer choice to all families.
I mean, the problem is that if you don’t do charter schools, most parents don’t get any choices. It’s just those that can afford to do something different. I think every parent ought to have some choices. I would be always mindful that we would slip, even unintentionally, into some kind of segregation. Because that’s the furthest thing that anybody wants. But I think charter schools have a role to play. They’re not the panacea for traditional schools. You need both. There are very compelling arguments that some of the work that’s being done in some of the most difficult places in the United States now are being done by charters. But charter schools fail, too. What we have to do, if a charter school is failing, is to not be afraid to end it. You can’t do it.
The Dean administration is going to be filing legislation regarding the county court clerk’s office regarding tax collection. This comes in light of the investigation into John Arriola and the whole wedding fees controversy. Should Arriola keep his job?
Dean: No. 1, you do have the work that [Attorney General Torry] Johnson is doing, and it would be inappropriate for me as the mayor to comment on it. I have great confidence in Torry to do whatever the right thing is. He’ll do it. In terms of this particular ordinance, the concern was that as a city, we have a fiduciary responsibility to collect all the taxes due us. Rich can talk about the situation with the hotel/motel tax he was collecting.
Riebeling: There’s just some dysfunctionality going on in the office right now, and we weren’t getting the money turned over on a timely basis. The code requires it to be done on a daily basis, and, you know, there’s some leeway there, but it was several weeks at a time. And April 1, there was a bond payment due for convention center bonds. And we couldn’t get the money transferred and posted into the Metro accounts. We weren’t gonna default on the bonds. We were going to make sure the payments were made. But no one seemed to understand the urgency of the matter. We have a duty to collect this tax. And then there was the issue on this liquor tax, and clearly no notices had gone out for a couple of years in terms of, “Are you paying or not?” and the response was, “Well, if you give me more money for postage, maybe I could send out the notice.” Without getting into the politics of it, on the pure business side of it, that’s not the way to run it. What happened was in 1996, Bill Covington was the county clerk, and he went to the legislature and got them to pass something that gave the council the authority to move it from finance to the county clerk. Now it’s simply a matter of getting the council to go back and repeal that and move it back to finance.
As the mayor said, we have a responsibility to make sure we’re collecting taxes, because if you’re paying your liquor tax and the guy down the street isn’t, that isn’t fair. First of all, we’re losing the money, which we need, but secondly, it’s not fair. It’s been in two different audit reports that there needs to be a system of compliance and monitoring to make sure people are paying their tax or fees. No system was put in place. Also, my staff starts worrying that we’re going to have to audit all these people. It takes a big staff to do that. So I told them to go meet with the internal auditor and in a 20-minute meeting figured out how the auditor, who’s independent, will start a monitoring procedure for the largest payers. It’s just a simple process like that that hadn’t been done in 6 to 8 years, and in one 20-minute meeting they worked an arrangement out. That’s $40 million that goes through there.