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The Music City Meltdown

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The Music City Meltdown

The Wall Street Journal April 28, 2021
Urban PolicyTax & Budget

A decade ago Nashville’s rise seemed inevitable, but fiscal recklessness left the city ill-prepared to absorb the pandemic’s economic blows.

For more than a decade, Nashville, Tenn., has been one of America’s hippest and fastest-growing cities. Anchored by the country-music industry and boosted by a hospitable state tax climate, the city and surrounding region attracted businesses and residents. While its music scene made it a tourist mecca, Nashville also lured a generation of college-educated transplants, earning a position as one of the country’s new “brainpower cities.”

These days Nashville is making its way onto other, less distinguished lists. The Institute for Truth in Accounting recently ranked it one of the country’s five worst “sinkhole” cities, with $22,000 in debt per resident. Its bonded debt alone has increased by more than $1.25 billion in 10 years. City leaders have used deficit financing to balance Nashville’s books and spent much of the city’s reserve funds. The Tennessee comptroller has threatened a state takeover, and even the Biden administration’s lavish stimulus isn’t enough to plug Nashville’s budget hole. Amid all this, angry local groups are trying to spur a special election to roll back a gigantic property tax increase. What was once called a miracle in Music City increasingly looks like a meltdown.

That’s quite a dubious record of achievement for a city with enviable economic growth. Rebounding robustly from the 2008-09 recession, greater Nashville gained nearly 300,000 jobs between 2010 and early 2020, an almost 40% increase. Employment in its hospitality industry expanded by 53% as developers added thousands of hotel rooms. Financial-services jobs grew by 46.9%, while professional services employment leapt by 69%. By March 2020, Nashville boasted an unemployment rate of only 3.4%

Continue reading the entire piece at the Wall Street Journal

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Steven Malanga is the George M. Yeager Fellow at the Manhattan Institute and a senior editor at City Journal.

Photo by Pgiam/iStock

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