Forbes.com, which caters to millions of readers worldwide, has just reported on and explained Nashville’s financial woes.
In a recently-published article, Tennessee-based businessman Tim Pagliara wrote about state Comptroller Justin Wilson’s displeasure with Metro Nashville’s finances and the threat of the city potentially falling into a receivership.
“Back in October, a month after taking office, Mayor (John) Cooper talked to The Wall Street Journal about his mandate to pull the city’s economy back from the brink by (among other things) curbing financial incentives and relocation deals to corporations. After the prior administration had awarded $167,000,000 in economic incentives in exchange for 13,000 new jobs and $1.2 billion in capital investments, the city could not balance the budget without selling assets like the Nashville Thermal Plant. Which, IMHO, is like selling your living room furniture to pay your electric bill. Tennessee has a unique set of checks and balances. State law mandates a balanced budget,” Pagliara wrote.
“In preparing this piece, I looked at recent articles about the increased flight of people and companies from NYC. Some surveys show that over 30 percent of the New Yorkers are considering moving out of state because of the high cost of living, complexity of life, and deteriorating infrastructure.”
Pagliara then went on to describe how the Tennessee State Office of Economic Development welcomed Amazon and the relocation of Alliance Bernstein’s Corporate Headquarters from New York City to Nashville.
“Yet, despite the budgetary shortfalls, Amazon and Alliance Bernstein were paid over $20,000 per employee for so-called relocation expenses. Why so much? And why, in the case of Alliance Bernstein, was this amount so much greater than what their counterparts, Goldman Sachs, JP Morgan, and Deutsche Bank, received to relocate to other cities?” Pagliara asked.
“After the people of New York rejected the deal with Amazon (it can be done), the company quietly expanded its growth plans elsewhere. And while Governor Andrew Cuomo lamented the loss of $27 billion dollars in tax revenue, he’d do well to heed the musings of Mayor Cooper: ‘With all these cranes in the sky, how did we run out of money?’ There are many reasons why the city ignored the realities of unsustainable growth. For several years, revenues grew at 32 percent while expenses grew at 38 percent. No one wanted to confront the reality of having to raise property taxes 16 percent to pay for the incentives that had been provided to companies like Amazon and Alliance Bernstein. Longtime residents were already mad enough about the horrific traffic problem. Asking them to pay out of pocket to make up for the political classes’ budgetary mistakes would add insult to injury. Then, State Comptroller Wilson finally put his foot down. Now the City Finance Director and Mayor will have to figure out how to continue to close the gap – and their constituents will bear the brunt.”
As The Tennessee Star reported this month, Metro Finance Director Kevin Crumbo said Wilson wants the following three things out of the city:
• A structurally balanced budget for the current fiscal year that is scheduled to end June 30
• A comprehensive cash management policy for all of Nashville
• Metro Nashville ‘s audited comprehensive annual financial reports and single audit reports by the end of December of each year.
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