Jan 27, 2023 - Politics

Lt. Gov. McNally pitches defunding Nashville's convention hall

Music City Center. Photo: John Greim/LightRocket via Getty Images

Lt. Gov. Randy McNally is proposing to defund the largest civic project in the city's history.

Driving the news: Legislation filed late Thursday by Sen. Jack Johnson on McNally's behalf deletes the tourism-related taxes dedicated for the $623 million Music City Center.

  • Those tourism taxes cover the annual debt obligations for the convention center.

Why it matters: The proposal is the latest legislation pursued by top Republican lawmakers in the wake of Nashville leaders saying no to the Republican National Convention in 2024.

  • The new bill could create budgetary chaos for Metro. There are major legal questions about the proposal. The Tennessee Journal first reported about the bill.

What he's saying: "Nashville has been afforded certain tools for the express purpose of encouraging convention tourism to the city. Over the last year, Metro has made it clear they are no longer interested in aggressively recruiting top-tier conventions to Nashville," McNally tells Axios through a spokesperson.

  • "That message has been received loud and clear by the General Assembly. If Nashville wants to prioritize political posturing over prosperity for its people, that's their prerogative. But the state does not have to participate."

Reality check: Music City Center is a major economic driver, bringing major conventions to the era and serving as a host for events like CMA Fest.

  • Metro Council hasn't said no to bringing conventions to Nashville in the past. Opponents rejected the RNC coming here over security concerns downtown.

Flashback: The city was very conservative in how it funded the new convention center under then-Mayor Karl Dean in 2010.

  • With state approval, Dean used car rental fees, hotel room rental taxes and sales tax collected within the convention center and adjoining Omni Hotel to pay debt for the convention hall.
  • The state also approved a tourism development zone (TDZ) around the convention center. The TDZ allocates state and local sales tax collected above the baseline year and dedicates it to the convention center. As it's turned out, more tourism revenues are being collected each year than are needed for annual debt obligations.

State of play: So much revenue has come in that Mayor John Cooper and the Convention Center Authority have worked out agreements to use the excess collections to pay for other projects.

  • Most recently, Cooper proposed earmarking some of the money for public restrooms downtown and for infrastructure costs to help rebuild Second Avenue following the 2020 Christmas Day bombing.

Because bondholders were promised those tourism tax dollars, there could be litigation over any state plan to roll them back.

  • The mayor's office along with Metro legal are reviewing the legislation, a Cooper spokesperson tells Axios.

Zoom out: Metro Council voted last year to reject an agreement for the city to host a major party political convention. At the time, the Republican National Committee was interested in Nashville for 2024, but ultimately voted to hold its convention in Milwaukee.

The other side: Metro Councilmember Bob Mendes tells Axios he expected more retribution from the state.

  • "Anyone who thought [shrinking the council] was the final punishment is insane. There was always going to be a bigger punishment as long as there's a Republican supermajority. There's a massive culture war going on in this country, and the state of Tennessee's leadership doesn't like the culture of Nashville and is going to keep coming after us."

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