This is key to Nashville's amazing growth
Nothing stops growth like the burden of taxes. And if you don’t believe me, just as the fine folks in the city where I was born, Detroit Michigan.
In the 1950’s Detroit was the fourth largest city in the US with more than 1 million people living in the Metro Area. It became a model city that was held up for all the world to see as a shining example of progress.
Within 30 years, Detroit was in a steep decline from which it is now starting to recover. And in that time period, Detroit lost half of it’s population (and tax base).
One of the biggest problems facing Detroit was it’s debt load. As they took on additional financial burdens, people left the city. As people left the city, the council raised taxes to make up for the lost revenue. And when the tax rates increased, it caused more people to leave.
It was a vicious cycle that went on for years until 2013. The year Detroit filed for bankruptcy on it’s $20 billion in debt obligations. It was by far the largest municipal bankruptcy in the history of the United States.
This forced the city to dramatically change the way it conducted business.
Now don’t get me wrong, I’m not trying to say that Nashville is like Detroit. Or that we are in the similar financial position.
I’m saying that we should learn from their mistakes so we don’t start down the same path.
This week Ben Cunningham, is seeking to amend the Metro Charter to limit the debt burden and to address the unfunded liability of the Metro Employees Pension.
In addition to the $3.1B in general obligation and revenue bonds, Nashville also has $2.7B in unfunded liability for pensions and $2.6B in unfunded liability for retiree health insurance.
Next on the Mayor’s wish list is $6B in spending for a regional transit system. And this debt limit referendum would cause Metro to rethink how they plan to fund Nashville’s transit system.
While transit it important to the future growth of Nashville, so is a metro government that is not overly burdened by debt obligations.
Several attempts have been made over the last few years to address these unfunded liabilities and they have all failed due to push back from city leaders and the Metro Council.
Here’s what I think Nashville needs to do.
We need to quit kicking the can down the road on unfunded liabilities and address these issues at the same time we address transit. These benefits continue to grow as a percentage of the Metro Budget, and they are not going to magically disappear.
Do we not owe a solid plan to fund the promises we made to the employees of Metro Nashville?
That’s enough from me for today. I’d love to hear from you. Hit reply and tell me what you think we should do about transit and our debt.
The Daily Deal in Nashville is a four bedroom home in need of renovation near the lake in Hendersonville that is selling for less than $84/SF.