Metro Budget

At the request of the Boards of Directors of the Nashville Area Chamber of Commerce and the Greater Nashville REALTORS®, the Nashville Area Chamber of Commerce is pleased to release the 2021 Metro Finance Study conducted by Elliott Davis. The 2021 Metro Finance Study’s objective was to provide information to the boards for their consideration in shaping the boards’ responses to Metro Nashville’s budgeting and financial decisions. This 2021 study is an update to the 2020 Metro Finance Study released earlier last year. 

The 2021 Metro Finance Study’s product is a trend analysis to assess Metro Nashville’s financial position and the creation of forecasts of the city’s general fund revenues and expenditures to predict how the City’s financial health would be impacted by different budgetary decisions. The forecast analysis is particularly interested in the impact on Metro Nashville general fund balance – funds used to mitigate current and future risks. 

The 2021 Metro Finance Study’s trend analysis shows that, through FY20 (the most recent accounting reports available), Metro Nashville continues to have inadequate fund balance to address unforeseen emergencies or unanticipated declines in tax revenues. 

The findings of the forecasting (which reflects the FY21 property tax rate increase) are particularly illuminating in the current budget discuss. The study forecasted the City’s future fiscal health in light of three scenarios:

First, a scenario that demonstrates how the City’s finances would have fared if the FY21 property tax rate increase had not occurred. In this scenario, the City would have had a negative fund balance by the end of FY23, which would have continued to fall further behind, leaving no emergency reserves for the City. 

Second, a scenario that assumes the FY21 property tax rate increase occurred, the 2021 reappraisal occurred, and the City reduced the FY22 tax rate to 5% below the Certified Tax Rate (the rate that generates the same property tax revenue in FY22 as in FY21). This scenario shows that the City would achieve a fund balance that met minimum industry standards by the end of 2021. The fund balance would grow after that to levels that would be considered healthy, not excessive, by industry standards.

Third, a scenario that assumes the FY21 property tax rate increase occurred, the 2021 reappraisal occurred, and the City kept the FY22 tax rate at the Certified Tax Rate and made investments in transit, affordable housing and creating a trust fund for OPEB. This scenario shows the City would reach best practice fund balance by the end of FY21. Fund balance would dip in FYs 2022 through 2024 and would begin growing again in FY25. This scenario most closely reflects Mayor Cooper’s proposed FY22 budget, however, Mayor Cooper chose investments in transit, housing affordability and in other areas including public safety and neighborhoods. This scenario shows that the City could make investments in personnel and services while maintaining an adequate general fund balance. The addition of more revenue allows the ability to fund the City’s other priorities.

Questions about the study can be sent to info@nashvillechamber.com.

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