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A bill to be entitled: The Budget Ordinance of the Metropolitan Government of Nashville and Davidson County, Tennessee for Fiscal Year 2027
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WHEREAS, Article 6 of the Metropolitan Charter provides for the preparation of the Annual Operating Budget of the Metropolitan Government and for its submission to the Council by the Mayor not later than May 1 of each year.
BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
ARTICLE I
The amounts hereinafter set out in Section I and Section II shall constitute the estimated revenues and applicable prorating provisions for property taxes, and the Operating Budget for The Metropolitan Government of Nashville and Davidson County, and the said sums specified herein are hereby appropriated for the purpose of meeting the expenses for the General Services District (GSD) and the Urban Services District (USD), respectively, for the various departments, institutions, offices, and agencies of the Metropolitan Government, and for meeting the payments of principal and interest on the Metropolitan Government debt maturing during the fiscal year beginning July 1, 2026 and ending June 30, 2027 (hereinafter referred to as Fiscal Year 2027 and FY 2027).
The informational summary sheets immediately following are summaries of the detailed estimated revenue sources and budget appropriations by funds for purposes and in amounts numerically itemized by departmental accounts in subsequent schedules of Section I and Section II.
In order to facilitate proper grant accounting, the Director of Finance is hereby authorized to transfer grant-related appropriations and estimated revenues from the general funds to existing or new grant-related special revenue funds at her discretion.
For the purpose of maintaining authorized position counts in Metro’s enterprise business system, the Director of Finance is hereby authorized to adjust budgeted positions and full-time equivalents of the various departments and agencies of the Metropolitan Government within authorized budget allocations established in this ordinance.
The Director of Finance is hereby authorized to transfer funds as necessary to implement the Guaranteed Payment Plan program previously approved by the Metropolitan Council.
The Director of Finance is hereby authorized to carry forward and allocate in FY 2027 any unencumbered and unexpended funds at June 30, 2026 for General Government Administration, Employee Benefits and Contingency, Economic Development, and Community Support.
The Director of Finance is hereby authorized to carry forward and allocate in FY 2027 any unencumbered and unexpended funds at June 30, 2026 for appropriations made from benefit trust fund accounts.
The Director of Finance is hereby authorized to adjust the interest earnings of each account in the Metro Investment Pool to recover a pro-rata share of the costs of the Treasurer’s investment and cash management programs.
All hereafter-collected revenues accruing to a respective special revenue, grant, internal service, or enterprise fund identified in Section I, Schedule D that are in excess of the revenues and fund balances as provided for in this ordinance are hereby appropriated to such respective fund unless otherwise provided for by this ordinance or applicable law. Any appropriation made pursuant to the foregoing sentence shall be subject to allotment by the Director of Finance, and no expenditure nor encumbrance shall be made until such allotment has been made.
For the purpose of providing funds in anticipation of various grant and other revenues, the Director of Finance is hereby authorized to enter into interfund loans between funds of the Metropolitan Government and between the Metropolitan Government and related but separate legal entities that are included in the Metropolitan Government’s reporting entity, as may be permitted under the laws of the State of Tennessee.
In the event adjustments are needed for internal service fund budgets by the Metro Council, the Director of Finance is authorized to adjust the affected operating budgets of internal service funds, special revenue funds, enterprise funds, and departmental operating budget accounts. The Director of Finance is authorized to adjust internal service fund budgets for purposes of incorporating pay plan adjustments as authorized by the Metro Council.
From the funds appropriated to the Hospital Authority, an amount not to exceed $3,600,000 shall be allocated and used exclusively for the reimbursement of costs incurred by the Hospital Authority associated with the provisioning of medical care at Nashville General Hospital for inmates in the care and custody of the Davidson County Sheriff. This provision will be administered by the Department of Health who shall verify eligible costs to be expended against such allocation, in consultation with the Sheriff's office and the Hospital Authority. Upon certification to the Director of Finance by the Department of Health that any portion of the allocation is no longer needed for the provision of inmate medical care, the Director of Finance is authorized to release such portion for expenditure by the Hospital Authority for any other lawful purpose.
Nashville General Hospital (NGH) serves as a safety net facility for the provision of acute medical care services to residents of Davidson County, Tennessee. NGH requires additional resources to provide health care services to the indigent, uninsured and Medicaid/TennCare patients in Davidson County; otherwise such services would be unavailable. An appropriation of $67,879,500 is to be provided to the Hospital Authority, all of which is provided as part of this Fiscal Year 2027 operating budget. A portion of the $67,879,500 appropriation shall be established for safety net expansion purposes based upon state determined guidelines. This safety net expansion appropriation shall be in the form of an intergovernmental transfer to the State of Tennessee as a match to secure federal funding. Such federal funding requires the approval of the Centers for Medicare and Medicaid Services (CMS). If CMS fails to approve the federal funding match, then the appropriation will be paid directly to the Hospital Authority. The Mayor is authorized to execute any and all documents necessary to complete the above-referenced transaction with the Federal and State governments.
As an express condition of the receipt of the Hospital Authority appropriation set forth herein, monthly, within 5 days of Hospital Authority Board review but no later than 45 days after the end of each month, the Hospital Authority shall provide electronic copies of the following:
(a) the most recent month end budget to actual income statement;
(b) the most recent cash flow statement showing each actual month beginning July 1, 2026 and showing each projected month through June 30, 2027;
(c) the most recent month’s balance sheet;
(d) the most recent bank statements or other documentation from all Hospital Authority banks showing detailed deposit and withdrawal transactions;
(e) aging reports with explanations for any amounts in dispute for accounts receivable, accounts payable and any recorded or unrecorded liabilities not included in accounts payable, including a comprehensive summary of each unpaid amount billed by Meharry Medical College;
(f) the previous month’s copies of the balance sheet;
(g) the monthly actual and projected cash flow;
(h) patient outcome documentation;
(i) co-pays and deductibles collected at time of service upon intake; and
(j) Nashville General Hospital department audits.
These records shall be submitted to the following:
a. the Metropolitan Director of Finance;
b. the Vice Mayor of the Metropolitan Council; and
c. each member of the Metropolitan Council.
Within 5 business days of the closure of the ledger for each month, but no later than 45 days after the end of each month, the Metropolitan Nashville Public Schools (MNPS) shall provide the following for the MNPS General Fund and special revenue funds and internal service funds managed by MNPS listed in Section 1, Schedule D of this ordinance:
(a) the most recent month end budget to actual expense activity with monthly projections through June 30, 2027;
(b) the most recent month end budget to actual revenue activity with monthly projections through June 30, 2027 for revenue accounts projected by MNPS;
(c) the most recent cash flow statement showing each actual month beginning July 1, 2026 and showing each projected month through June 30, 2027;
(d) any reported programmatic or funding changes in Tennessee Investment in Student Achievement (TISA);
(e) any audit findings or legal determinations that could have a material impact on financial resources;
(f) summary by grant of the amounts billed but not yet received;
(g) summary by grant of the amounts expended but not yet billed to grantors; and
(h) a report on the status of revenue allocations and expenditure status of any local, state, or federal funds made available to the MNPS for COVID-19 relief.
These records shall be submitted to the following:
a. the Metropolitan Director of Finance;
b. the Mayor’s Office;
c. the Vice Mayor of the Metropolitan Council; and
d. each member of the Metropolitan Council.
The Director of Finance is hereby authorized to carry forward and allocate remaining funds at June 30, 2026 and funds received during FY 2027 from Hotel Occupancy Tax Funds (30047 Hotel Occupancy 2007 1% Secondary TDZ Fund) enacted pursuant to Ordinance BL2010-727, as amended by BL2017-589, for the purpose of reimbursing expenses related to flood mitigation and the repair and renovation of the Grand Ole Opry House due to damages directly caused by the May 2010 flood.
The Director of Finance is hereby authorized to increase the allocation for the tourist promotion budget from Hotel Motel Occupancy Tax Funds (30044 Hotel Tourist Promotion) for the purpose of recognizing any revenue received in excess of budgeted revenues to support the direct promotion of tourism in accordance with TCA Title 7, Chapter 4.
Upon the determination of any pay plan adjustments by the Metro Council applicable to general government employees subject to such plan during the fiscal year, the Director of Finance shall determine the cumulative pro rata increase resulting from such adjustments, and the Metropolitan Mayor is hereby authorized to make such amendments to the respective letters of agreement with the county constitutional officers as may be necessary to reflect the corresponding allocations for employees within their respective offices.
Pursuant to RS2025-1139 (Fund Balance Reserve Policies), the Director of Finance shall establish the Budget Sustainability Reserve Targets as follows: General Service District Fund, 2%; General Services District Debt Service Fund, 2%; General Purpose Schools Fund, 2%; General Purpose Schools Debt Service Fund, 2%; Urban Services District Fund, 4%; and Urban Services Debt Service Fund 4%.
Pursuant to RS2025-1139 (Fund Balance Reserve Policies), the Director of Finance shall restore Operational Reserve and Budget Sustainability to their minimum or otherwise established targets.
Agenda Analysis
Analysis
This ordinance is the proposed operating budget for the Metropolitan Government for Fiscal Year 2027. The budget filed by the Mayor provides for the following proposed funding:
• General Services District General Fund $1,893,502,700
• General Services District Schools Fund $1,448,228,500
• General Services District General Debt Service Fund $294,942,400
• General Services District Schools Debt Service Fund $130,127,400
TOTAL GENERAL SERVICES DISTRICT BUDGET $3,766,801,000
• Urban Services District General Fund $65,570,400
• Urban Services District General Debt Service Fund $16,249,500
TOTAL URBAN SERVICES DISTRICT BUDGET $81,819,900
TOTAL OPERATING BUDGET $3,848,620,900
The Fiscal Year 2026 budget is $3,799,676,000. The Mayor’s proposed budget represents an overall increase of $48,944,900 (1.9%).
Consistent with the Minimum Targets required by the Fund Balance Policies adopted by the Council in Resolution RS2025-1139, the Mayor’s proposed budget is projected to result in the following fund balance percentages by June 30, 2027:
• General Services District General Fund 17%
• General Services District Debt Service Fund 50%
• General Services District Schools Operations Fund 17%
• General Services District Schools Debt Service Fund 50%
• Urban Services District General Fund 17%
• Urban Services District Debt Service Fund 50%
Pursuant to the Fund Balance Policies, in addition to the operating and debt services fund balances above, in each annual operating budget ordinance, a Budget Sustainability Reserve must be established at a minimum of 1% of budgeted operating expenditures and budgeted debt service or a greater amount if determined necessary by the Finance Director, but no more than 6%. The proposed budget includes the Budget Sustainability Reserves:
• General Services District General Fund 2%
• General Services District Debt Service Fund 2%
• General Services District Schools Operations Fund 2%
• General Services District Schools Debt Service Fund 2%
• Urban Services District General Fund 4%
• Urban Services District Debt Service Fund 4%
Pursuant to the Fund Balance Policies adopted by the Council in Resolution No. RS2025-1139, appropriations of surplus funds from the unreserved fund balances of the primary budgetary funds are permissible only after meeting levels recommended in the policies during the budget annual review. Any remaining balance may be utilized for one-time expenditures: capital expenditures; debt reduction; and establishment of other reserves to enhance Metro’s financial position. The appropriations of $48,794,400 of fund balance surplus funds will support the majority of funding for the following one-time expenses in the budget:
• Medical Benefit Adjustment - $21,000,000
• Injury on Duty for Pensioners and Employees - $13,700,000
• Insurance Fund Balance Adjustment -$7,300,000
• Affordable Housing Revolving Loan - $7,000,000
• Elections - $1,597,700
• General Hospital COLA (FY2026) - $1,100,000
• Other Departments - $1,082,800
• NDOT Studies - $1,000,000
The proposed budget includes $36,832,700 for new pay plan improvements, a 37.5 percent decrease from the FY26 pay plan improvement amount. All employees would receive a 1.7 percent across the board increase in pay on July 1, 2026. In addition, funding is included for two percent increment increases for all eligible employees and funding for two percent open range pay increases. The department heads have the discretion to determine the actual raises to be given to each open range employee.
The Mayor’s budget includes a $65,384,600 for equipment and building repairs - the General Fund Reserve Fund, commonly known as the “4% Fund.” For FY26, the appropriated amount is equal to the minimum required by the Metro Charter - 4 percent of gross revenue amount of original monies collected in the general services district.
The Barnes Fund would receive an additional $22,000,000 as part of a continuing commitment for affordable housing, which is partly funded by the local portion of the hotel/motel taxes generated by short-term rental properties. This amount represents an increase of $6,000,000 from the FY26 budget.
The largest investment in the Mayor’s proposed budget is for Metro Nashville Public Schools, which includes a 2.4 percent increase in the amount of local funding for schools. This increase along with the fund balance restoration would result in a total MNPS operating budget of $1,448,258,500.
The proposed budget accounts for a 0.5 percent reduction in the local sales tax on the sale of groceries. The Department of Finance expects that a 10-month decrease in revenue as contemplated by this proposal would reduce the operating budget by approximately $9,200,000. The Metropolitan Council will consider the reduction in the grocery sales tax through Resolution No. RS2026-1961.
The Mayor’s proposed budget also accounts for a 1.5 percent budget efficiency reduction in all general government departments of the Metropolitan Government. These reductions are permanent. They were projected after departments’ budget modifications were added to their budgets, so some departments received more funding than they received in previous years. Combined, these cuts reduce expenditures in the operating budget by approximately $20,600,000.
Of the $5,788,000 appropriated to the Arts Commission, $3,263,200 is conditioned upon the Arts Commission providing its annual report of grants funding, as required by Section 7-3-314(d) of the Tennessee Code Annotated, and Council approval of the grant award criteria, as required by Section 2.112.040(H) of the Metropolitan Code of Laws. This appropriation did not change from the FY26 budget.
The Hospital Authority would receive a subsidy from the general fund of $67,879,500, an increase of approximately 11.7 percent from the FY2026 budgeted subsidy. This subsidy is conditioned upon the Hospital Authority providing monthly financial statements to the Council and establishing at each subsidy draw a detailed expenditure plan outlining the expected use of the funds, including a breakdown that distinguishes between labor and non-labor costs. In addition to the subsidy, the budget ordinance includes approximately $2.7 million for Bordeaux Long Term Care and Knowles Home management contracts.
Section 6.07 of the Charter requires the next order of business following adoption of the operating budget ordinance, to be the adoption of the tax levy ordinance. The proposed FY27 property tax levies would be: $2.782 per $100 of assessed value in the GSD and $0.032 per $100 of assessed value in the USD, giving a combined rate of $2.814.
Per Rules 39 and 41.1 of the Metro Council Rules of Procedure, the budget ordinance is amendable on third reading. And pursuant to section 6.06 of the Metro Charter, the Council must adopt a substitute operating budget no later than June 30. Otherwise, the budget as originally submitted by the Mayor becomes effective on July 1 by operation of law.
Analysis of the Substitute Budget
The Chair of the Budget and Finance Committee is proposing a substitute budget that provides for some changes in appropriations. The substitute includes increased funding totaling $8,589,300 for the following departments and programs:
• $2,100,000 appropriated to support the Eviction Right to Counsel program, which will receive a total of $4.5 million in funding.
• $1,250,000 appropriated to the Office of Homeless Services to support continued management of the Rodeway Inn.
• $1,000,000 appropriated to the Barnes Housing Trust Fund, increasing the total fund appropriation to $23 million.
• $401,500 appropriated to the Nashville Fire Department to support a second fully-funded shift for the REACH program.
• $250,000 appropriated to the Metro Action Commission to support Urban League of Middle Tennessee in its creation of a workforce development program.
• $60,000 appropriated to support the Pet Community Center in their spay and neutering efforts.
• $100,000 appropriated to support The Branch to provide food access and English classes to residents
• $101,800 appropriated to the General Sessions Court to hire a new social worker.
• $150,000 appropriated to support Neighbor 2 Neighbor.
• $167,000 appropriated to support an Antioch Health Study.
• $300,000 appropriated for Contribute Music and Entertainment Economic Development and Film Initiatives.
• $300,000 appropriated to support community housing.
• $25,000 appropriated to support childcare technical assistance.
• $800,000 appropriated to support a performance audit of MNPS.
• $25,000 appropriated to the Assessor of Property to increase compensation for the independent Metropolitan Board of Equalization.
• $25,000 appropriated to the Fairgrounds to support student vendors.
• $75,000 appropriated to the Juvenile Court to support CASA in training court volunteers.
• $153,000 appropriated to the Metro Action Commission for a childcare therapy position.
• $25,000 appropriated to the Metro Action Commission to support Music City Construction.
• $352,000 appropriated to the Office of Family Safety to support the Mary Parrish Center, the YWCA, the Sexual Assault Center, Red Frogs, and Ella’s House
• $225,000 appropriated to Health to support The Contributor’s SOAR program.
• $300,000 appropriated to the Office of Homeless Services to support Nashville Launch Pad.
• $204,000 appropriated to Nashville Public Library to support NAZA, shuttle services to the downtown branch, and the Oasis Center’s College Connection Program.
• $200,000 appropriated to the Trustee’s Office to fund an Open Government software program.
The following appropriations are being reduced to fund the increased expenditures:
• Property Loss ($2,000,000)
• Judgments/Losses ($2,500,000)
• Contingency Utility ($1,100,000)
• Contingency Subrogation ($50,000)
• Dell ECD Incentive ($500,000)
• Ballpark Debt Service Contribution ($250,000)
• Planning Commission ($650,000)
• MNPS Sales Tax Revenue ($550,000)
In compliance with the Fund Balance Policies, the total reserves available for use in the event of unforeseen emergencies or economic downturns has not been diminished.
The budget ordinance is amendable on third reading. Pursuant to Council Rules, no amendment to the budget may be offered unless it has been submitted to the Budget & Finance Committee for a recommendation. The Budget & Finance Committee will meet at Monday, June 15, at 5 p.m. to consider the substitute budget. The full Council will consider the Chair’s substitute budget ordinance at the regular Council meeting on Tuesday, June 16 at 6:30 p.m.