Line Item 7777: A Little Tif for Tat

Nashville has gradually expanded its tax breaks and tax incentives for large corporations to move to (or stay in) Nashville.  Using the ever expanding notion of tax increment financing (tif), Nashville lures development by foregoing taxes for large corporations, thus sharing in the cost of construction. The political process is relatively simple: a company wants to expand or relocate; the executive branch negotiates incentives; and the legislative branch judges each proposal on its own merits. Determining the cost and benefit of each package is often a matter of marketing and political gamesmanship. Accurately analyzing the cost/benefit of the whole program seems impossible without an extensive audit. 

A good place to start is in the school system budget.  Line Item 7777, in the Fixed Charges category of the budget, is labeled “Property Tax Refund.”  This is the line item that accounts for the tif incentives the people of Nashville grant to large companies. It is the amount of dedicated education funding the government requires the school system pay back to fund the relocation and expansion efforts of the corporations benefiting from the tax breaks.  Put another way: this is the money the Metro Council, Mayor and Finance Department take out of the classroom and put in the hands of big business in the name of economic development.

The school board and school system have no choice.  The Mayor and Council have set the incentives and given away the tax revenue that comes to the schools.  It is a “Fixed Charge,” and the school system relies on the Finance Department to tell them how much it is each year. 

This year, the children of Nashville will return $6,027,900.00 in education funds to the Metro government to give to corporations. That’s an increase of $791,900.00 over last year’s budget and almost three times the amount in 2007-08 ($2,346,700) as the incentives have steadily and dramatically grown.

Here’s some perspective: The $6,027,900.00 the school system is required to pay back to the Metro Council is more than it is given by the Council to spend on the world renowned Pre-K Centers (by about one million dollars – line item 2328); more than they can spend on the 220 school bus monitors (by over one-half million – line item 4137); more than it spends on Alternative Learning Centers (by three million – line item 2600); and more than it spends on psychological services (by one and one-half million – line item 2160).  Here’s the kicker.  The six million dollars that the school system is required to pay back to the Metro Council is more than the Metro Council gives the school system to buy textbooks (line item 2180).  Seriously!  More than the budget allows for textbooks!

Apparently, this money doesn’t really exist.  The government never takes a refund, because it never really gives the money to the school system, because the money is never collected from these companies that are driving the economic development train. So, there it is in the bottom line: the people of Nashville pretending to appropriate $6,027,900.00 to education. 

The Metro Council has the opportunity Monday to glance in the mirror and reflect on the cost of tif on the children of Nashville when the school system presents its budget. The Council hearing on the school budget is the time council members grill the school system on how it spends the money allotted to it.  There is a natural and appropriate tension.  This year, the Metro Council should not only examine how much the schools get, but also how much they require the schools to give.