Can Red States Save Blue Cities From Themselves?
Nashville, Tennessee, is a case study in how Democrat-run cities function.
Americans have a variety of political influences in their lives depending on where they live. If one lives in the leftist bastion of San Francisco, California, the change in the federal policies from the Biden-Harris administration feels normal. If one lives in Pensacola, Florida — a red city in a red state with a heavy presence of our men and women in the military and their families — the political and policy fights are critical. But what if you’re an American who lives in a blue city in the midst of a red state?
Nashville is one such city. Tennessee’s capital was described by NBC back in October 2020 as a “a big blue dot in a deep red state.” Statistics reveal that Nashville voters make it a fairly deep blue dot, with 64.5% of the voting population leaning left, only 32.4% voting right of center, and a measly 3.1% identifying as “independent” in a state with open primaries. Clearly, the top of the electoral ticket in November 2020 reflects the ideology of the left-leaning population residing in the Music City, a metropolitan government with a massive 41 council seats, a Democrat mayor, and a $2.2 billion budget. At least 40% of the budget goes to fund schools — schools with 29% proficiency in math and 26% proficiency in reading and language arts. Big blue dot, indeed.
The public may miss, however, that a big blue city such as Nashville, nestled in a bright red state like Tennessee, benefits from the fiscal stability of the state while being a liability and not an asset related to its governance. In other words, Tennessee has saved Nashville from itself, and other blue cities are likely in the same position.
Let’s take a quick and cursory look at this example.
Tennessee’s constitution mandates a balanced budget. No state can print money, as the Biden-Harris administration is doing faster than any counterfeit mobsters ever could. The Volunteer State just passed and published its $42.6 billion budget, carrying no debt, adding $250 million to its already robustly and securely funded state pension plan, and boosting its state savings account (known as a Rainy-Day Fund) to $1.5 billion. Tennessee, led by a Republican governor and a bicameral legislature of a super-majority of Republican officials, fully funded the traditional departments of government — education, healthcare for the poor, and roads. This infrastructure, by the way, is not paved with debt but funded as the project occurs, unlike bonds and toll roads of other states. Tennessee also grew its economy by welcoming incoming companies fleeing tax-and-regulate policies elsewhere.
Pre-COVID, there were 18 companies making Fortune’s list of top companies with headquarters in Tennessee, predominantly Nashville. That list, which is now growing, includes companies ranging from logistics king FedEx to financial asset manager AllianceBernstein. Within the last few days, Oracle, the software and technology giant, has announced a major operation in Nashville involving 8,500 jobs and a $1.2 billion campus.
But are companies moving because of the attraction to cities like Democrat-led Nashville, or are they coming because of the Republican policies of no income tax, no death tax, low business taxes, and significantly fewer regulations on operations and earnings?
Nashville is a great Southern city that is down to business in the boardrooms off Commerce Street and throwing parties on Broadway, literally on the same block. Yet Nashville made serious headlines in 2019 when Tennessee’s comptroller of the Treasury announced that Nashville would either address its dire financial situation or have the comptroller essentially shut down its operations and run the city’s budget from up the hill at the State Capitol.
Exactly how bad had Nashville finances gotten under the leadership of a Democrat mayor and Metro-Council? When confronted with their big-spending ways in November 2019 by then-Comptroller Justin Wilson, Nashville expenditures had grown by 138% since 2013 while cash in the Music City’s coffers was down 91%. According to a May 2020 Tennessean article, the city’s debt had climbed to $3.5 billion with a payment of $336.9 million on the debt service, a 15% increase from the previous year alone.
And how did a city on the move with such expansion get itself into such a money pit? You guessed it! Corporate welfare giveaways, such as stadiums for a Minor League Baseball team and a Major League Soccer team, a $600 million convention center, as well as $52 million for an outdoor amphitheater on top of its debt load for schools in need of repair, roads that are woefully inadequate for growth of traffic volume, and an elected body focused on spending money and not balancing its budget.
The Metro-Council, whose members enjoy a lifetime of Cadillac healthcare benefits costing the city’s taxpayers $1 million annually, didn’t adjust its property tax rate in 2009, 2013, or 2017 as values increased with growth to match its diminishing fund balance that is now in such disarray.
So, Nashville-Davidson County property owners should expect a 34% property tax increase in 2021. But the big increase won’t touch the long-term liability of a projected $4 billion in liabilities to cover the city-funded pensions.
The words of TN Comptroller Wilson from 2019 likely echo throughout the legislative chamber: Their choices are to “raise revenue and cut spending.” His final warning was, “All we do is determine whether or not [the budget] is balanced. How you get there is not the state’s responsibility.”
Red-state policy victories and values camouflage the blue-city policy failures. But can red states save blue cities from themselves even as Joe Biden and Kamala Harris operate from the same blue playbook in DC, but with federal strings and mandates attached to funding?
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