Nashville Mayor John Cooper's first budget proposal reflected a city pushed to the brink.

Cooper on Tuesday pressed for a 31.7%property tax hike and deep cuts that he said represent “the greatest financial challenge" the city has seen in a lifetime.

"This is a crisis budget," Cooper said, laying out a sobering outlook for the city's financial future.

Long-simmering economic imbalances have been exacerbated by a deadly tornado and COVID-19, unexpected crises that torpedoed critical revenue sources. The mayor's office delayed his budget presentation and worked up to the last minute to assess the impact of the unprecedented disasters.

Nashville will need to “slow down, cut back, trim, slice and save” to survive and maintain stability, Cooper said.

Cooper's $2.44 billion budget proposal is about $115 million more than this year's budget, with much of that increase focused on replenishing funds that have been drained by the city's ongoing financial headaches.

Cooper said his budget was constructed to avoid layoffs and preserve services, but that it would require substantial cuts in several areas.

Planned raises or cost-of-living adjustments for city employees once again bear the brunt of the city's budget woes. Cooper said those were ruled out until the city had reached the other side of the pandemic.

Schools will see a relatively flat budget allocation under Cooper's plan, short of the modest increase the district had requested. The district already is confronting a midyear budget cut requested by the city.

Discretionary funding, including city grants to local nonprofits, would be cut in half.

“In the end, hard, hard decisions have to be made," Cooper said. “Everybody is sacrificing in this budget.”

The city must approve next year's budget by June 30. The new fiscal year starts July 1.

Fierce debate likely

A fierce battle is likely as city leaders consider next steps. At least one council member already plans to propose a competing budget.

But Cooper said rejecting his sharp tax hike would require mass layoffs of city employees.

“There is no other way,” he said.

City leaders expect the COVID-19 pandemic will lead to a revenue loss of $470 million over a 16-month period.

Federal aid doled out after the deadly March tornado and the coronavirus will not be enough to close the gap, Cooper said.

Local officials are still coming to grips with the fallout, and much is still unknown. But more difficult choices seem inevitable.

“There is no cavalry coming to the rescue,” Cooper said, referring to “disappointing” aid from the federal government.

At-large Council member Bob Mendes, chair of the finance committee, acknowledged the need for a property tax increase in a statement.

"The reality is that there is no way to avoid a rate increase this year. I’m glad to see the mayor acknowledge this," Mendes said. "My concern is about whether this budget is too rough on Metro employees and the important nonprofits that serve Nashvillians."

Nashville's first tax hike since 2012

The mayor's 2020-21 budget, which needs council approval, calls for Nashville's first property tax increase since a modest hike in 2012.

Under Cooper's plan, property tax rates would jump by $1. That would move the rate from $3.155 to $4.155 in the Urban Services District. For a home appraised at $250,000, that would mean an increase of about $625 per year.

The rest of Davidson County, further from the city center, would see its residential property taxes raised from $2.755 to $3.755.

The newly proposed tax rate is still lower than the combined city-county rates in Tennessee's other major cities.

Cooper spoke against a tax hike when he was campaigning last year, but in recent months has said the city needed to raise taxes to dig out of a deep financial hole.

While most major players agree some kind of increase is needed, there is likely to be much debate over the amount — a divided Metro Council has repeatedly rejected efforts to increase taxes at all.

At-large Council member Steve Glover already said he plans on introducing his own budget with a small tax increase, akin to a move he made last year.

In a statement after Cooper's presentation, Glover said he wanted to "work with the budget and find a solution other than $1.00."

How the city got into this position

Nashville faced an uphill climb even before a deadly tornado ripped through scores of buildings and the coronavirus effectively shut down the local economy.

Past mayors rejected a property tax increase as spending soared, quickly depleting the city's reserves and setting the course for a perfect storm.

After two deals to bring in a quick influx of cash faltered last year, Nashville's house of cards collapsed, leading to a $42 million shortfall. The state comptroller slammed the city for overspending and poor planning.

Cooper's team scrambled to fill that gap, but the tornado and the coronavirus hammered the city before it could regain its footing. Paltry savings will do little to cushion the blow of a new, larger deficit.

"Metro made a bet. Metro made a bet that continued growth would cover having a very small rainy day fund, and Nashville lost," Mendes, the finance committee chair, said this week before the budget was released. “The lack of a rainy day fund is going to go through us like a buzzsaw."

Leaders answered the latest cash crunch with a new wave of austerity measures, slashing capital spending, which is separate from the city's operating budget, and implementing a hiring freeze.

Existing city employees are already being hit hard, seeing promised raises squeezed out.

The city's human resources department has presented a pay plan to freeze raises for public employees, a nearly $26 million "cost avoidance" measure that would stop step increases and cost-of-living adjustments.

The Metro Civil Services Commission also approved a furlough option for human resources, a potential option as the city looks to avoid layoffs.

Cooper's budget proposal indicates those kinds of moves could continue through 2021.

In the last economic downturn, which was followed by the historic May 2010 flood, then-Mayor Karl Dean had to cobble together a budget that, for the first time in the history of Metro government, featured declining overall revenues.

Dean eliminated open positions, laid off some staff and refinanced $190 million in debt.

Those decisions gave Nashville breathing room at the time. But the same options are less potent now.

Nashville’s debt payments have reached a record level, driven in part by the decision to refinance debt. This fiscal year Metro is expected to pay $336.9 million on debt service, up 15% from fiscal 2019.

Tough road ahead for schools

The financial outlook could prove especially tough for Metro Nashville Public Schools. The district has long sought more money to cover rising expenses and increase teacher pay, particularly as it challenges the state in court over Tennessee's school funding formula.

State law requires at least half of local sales tax revenue to be allocated toward schools. Nashville typically sends two-thirds of that revenue to the district. With sales tax revenue in peril, schools officials have been bracing for bad news.

The district received $914 million from the city for the current fiscal year. But Cooper asked the district to prepare for a possible $100 million cut from the district's current budget.

The school board proposed an initial $950 million budget for 2020-21 to maintain normal district operations without cuts and to fund employee raises.

But Cooper's budget calls for flat funding for schools, with an increase of less than $1 million over this year's allocation.

That will likely require the district to look at more cuts as it confronts added demands created by the tornado and COVID-19.

This is a developing story.

Reach Adam Tamburin at atamburin@tennessean.com and 615-726-5986. Follow him on Twitter @tamburintweets.