Tornado, coronavirus put further pressure on Metro Nashville's already-strained budget

The fiscal outlook already appeared cloudy for Nashville when the rain started falling March 3 and an EF-3 tornado tore a long, destructive path through the city. 

Then, with at least 17 reported cases of COVID-19 in the county — at least 39 across Tennessee by Sunday and more expected — getting Metro's finances in order has only gotten more difficult for Mayor John Cooper and his administration as they craft a budget to present at the end this month.  

Officials are in the early stages of assessing damages but Cooper says it's clear the storm, which left neighborhoods in shattered pieces, has resulted in a "large multimillion-dollar hit" to the city's budget. 

"There's no way around it," he told The Tennessean. 

The city's insurance will help cover damages to Metro government and school buildings and infrastructure, along with state and federal aid. But some money will take time to come in and some costs might not be covered through aid. 

The spread of the coronavirus, which causes COVID-19, has already impacted the economy. The Nashville Visitors & Convention Corp reported Thursday 135 group meetings and conventions have been canceled along with at least 73,879 hotel room nights.

Those cancellations so far, officials estimate, represent a loss of $35.44 million in direct spending and have cost $2.9 million in state taxes and $3.15 million in local taxes. 

"We're going to experience the economic impact, both revenue and expense, from the virus and the storm," Metro Finance Director Kevin Crumbo said. "I think those are going to be substantial numbers."

Cooper announced sweeping changes Sunday, including closing bars throughout Davidson County and severely limiting restaurant capacity, including in the tourist-heavy Lower Broadway area.

The two crises will have a lingering impact on how the city thinks about its upcoming budget, other long-standing issues and its bleak cash reserve forecast. 

The state comptroller had projected in November that by the end of the budget year on June 30, Metro was set to have just 21 days — $65.3 million — of cash on hand to operate its general fund and not even a day — $2.3 million — for its general purpose school fund.

The biggest question, Crumbo said, is how quickly the city can replenish those funds now that it has experienced "rainy day" events and needs. 

"It's certainty driven those balances lower," he told The Tennessean on Tuesday.  "The comptroller has been very clear that the so-called 'rainy day fund' needs to increase and I think this is a good kick in the pants to all of us to do that." 

Crumbo is expected to present initial damage figures at the council's budget and finance committee meeting on Monday and answer some questions put forth by the finance chair, at-large Council Member Bob Mendes. 

"One of the concerns on all of our minds is Metro's diminished savings," Mendes wrote in a memo to the administration Wednesday, asking for more preliminary financial forecasting. 

Coronavirus takes financial toll

Statewide, business officials are bracing for the economic impact of the coronavirus outbreak that has interrupted supply chains, sent stocks tumbling and threatened the hospitality sector's momentum just ahead of spring break travel.

Concerns were amplified Wednesday night when President Donald Trump announced new restrictions amid the COVID-19 concerns — including suspending travel from parts of Europe for 30 days, with exemptions for Americans who had undergone certain screenings.

And on Thursday, Gov. Bill Lee declared a state of emergency. 

Sports leagues quickly canceled or suspended their seasons, including the NBA, NHL and Major League Soccer. Major League Baseball will delay the start of its season by two weeks. 

In Nashville, the SEC men's basketball tournament, which was expected to bring $20 million to the city, was also canceled.

As the virus continues to spread, the precautions that come with it mean the city will continue to lose out on tourism dollars and spending if residents are required to stay at home. Officials expects the number of cancellations to climb in the next two weeks.

This could be a hurdle for Cooper, who is seeking reroute tourism dollars to cover some city costs. The administration took a loss this week when the state on Tuesday denied efforts by state Sen. Steve Dickerson, R-Nashville, and Rep. Darren Jernigan, D-Old Hickory, that would have allowed Metro to charge developer impact fees. 

Another effort from the two state legislators, an attempt to redirect rental car revenue at the Nashville airport to be used for a reserve fund for future debt service, is stalled. 

Cooper was successful early in his term getting an additional $12 million this year from the Music City Center to help bridge a nearly $42 million shortfall in the current budget. 

The city also turned to the Nashville Convention & Visitors Corp. for $3.6 million to help fill the gap. Crumbo said Tuesday he doesn't see recent events impacting the funds identified to balance this year's budget. 

"We've done very well on all that," he said. 

Costs of tornado recovery mount

The administration released a modified capital spending plan Friday to address emergency Metro and school needs after the storm and contingency funds for dealing with the effects of the virus. 

The new plan is about $26 million more than the initial $154 million plan the administration announced in February. It includes about $8.75 million more for Nashville schools, the majority toward rebuilding Robert Churchwell Museum Magnet Elementary School and Meigs Magnet Middle School. 

About $11.5 million will go toward damages to Metro government buildings and infrastructure, with $4 million for emergency response funds and $1 million for information technology services.

Officials had placed Churchwell and Meigs students at other locations earlier this week, before classes were canceled for the remainder of the week Thursday due to concerns about the coronavirus. 

Several Metro buildings were damaged, including the McGruder Family Resource Center, the North Precinct police building, the Clifford Allen Building, two fire stations, the Bordeaux Hospital, and the Hill Detention Center and sheriff's administration building.

City employees and public safety personnel took on and continue to respond to massive storm-related needs — all while being understaffed. This week the mayor's office said 257 stop signs and 61 traffic signals have been repaired or replaced, 2,469 loads of debris have been hauled and power has been restore to a majority of 50,000 NES customers who lost power at the peak of the storm.

Task force formed, but tough work ahead

The finance department has put in place a task force concept akin to the one in the aftermath of Nashville's historic 2010 floods that caused 21 deaths around Tennessee and $2 billion of private property damage in the Nashville area.

Leading the efforts is Metro's new deputy director of finance, Mary Jo Wiggins, who previously served as the top executive of United Way Nashville and played a key role in that organization's efforts response to the floods.

The department, Crumbo said, will look at the most immediate needs for recovery such as making sure the city has funds available for public safety overtime and out-of-pocket expenses. And for the longer term, the city will work with FEMA and TEMA to recoup certain costs. 

"So much of what we do today is going to impact us in the future," he said.

The city has stressed for its employees to document all expenses and damages and have shared the advice with residents and business owners impacted by the storm in order to get disaster relief. 

Crumbo said the administration has completed all department budget meetings and finalized reviewing what other additional funds may be necessary to meet Cooper's budget priorities.

Cooper will give a State of Metro address in the council chambers on March 31, along with his budget for the year beginning July 1. 

Even as the city grapples with tornado recovery and the growing virus outbreak, Cooper said the work of government must continue.

"In the meantime, you have a whole city to operate and teachers that need to be hired for the next school year. We've got a life that has to go on, so you have to deal with both," he said. 

Given the city's financial situation, compounded by recent events, Cooper's budget is highly anticipated. With storm expenses, hits to sales tax revenue from the virus and the state blocking potential new revenue sources, the city will have to, even more than before, deliberate on possible tax increases. 

In January, Cooper said the option for raising property taxes in Nashville has been "left open." Crumbo, who said talks have changed on revenue and expenses due to the recent events, declined to comment on a possible tax increase until Cooper announces his budget.

During a series of community meetings held by Mendes and Council Member Kyonztè Toombs, the budget committee's vice chair, some residents expressed support for a property tax increase if city leaders can clearly make the case that the benefits would extend beyond the downtown core. 

"For years we're paying for visitors to come and enjoy the city that we cannot afford to enjoy," said the Rev. Judy Cummings at a meeting held in Northwest Nashville. "What are you all wanting to do and what support do you need from the community, to make that money more readily available to the community that have been destroyed by the visitors that come."

Jamie McGee contributed to this report.

Yihyun Jeong covers politics in Nashville for USA TODAY NETWORK - TENNESSEE. Reach her at yjeong@tennessean.com and follow her on Twitter @yihyun_jeong.