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Nearly 40% of Tennessee’s population resides in one of the state’s “Big Four” urban counties—Davidson, Hamilton, Knox and Shelby. The mayors of these counties recently sat down together in the Nashville offices of Farris, Matthews, Branan, Bobango, Hellen & Dunlap to discuss issues of commonality across their jurisdictions with Business Tennessee editor Drew Ruble.

Ruble: The state’s formula for funding public schools, the Basic Education Program, or BEP, is intended to ensure equity in funding for rural school districts. The argument has been made that the system in fact discriminates against urban county systems. Is the current formula inequitable? Is revising the BEP the top priority among urban county mayors?

Purcell: The formula was flawed from the beginning in the area of cost of living. That portion of the formula simply has not reflected appropriately what it takes for a teacher or anyone else to live inside one of these urban counties. Secondly, the formula was significantly altered by legislative action in an attempt to meet the needs of rural and suburban systems, primarily rural. But the ultimate effect of that was to worsen the disparity between the way in which urban counties were being treated because there was no overall increase in the size of the pie, they simply redistributed money that would have otherwise been coming to us.

Ramsey: The formula is totally unfair. We in Hamilton County are last in funding with the state, and we put in a higher percentage of local money than most counties. We have counties who have plenty of ability to pay who get more BEP funds per student than we do in the metropolitan counties. We are coming out on the short end of the stick under the BEP formula, and I haven’t found anybody yet who has disagreed with me. In fact, when you sit down and talk with the governor, he recognizes that fact. He’s been a metropolitan mayor—he understands and knows we are right. It’s just a matter of the will to change it, and that has to be done through the legislative process.

Purcell: Something that we didn’t focus on at the time that we passed the BEP—I was in the General Assembly—are the very specific needs of every county and especially of these urban counties to deal with at-risk kids, which we have in abundance and in increasing numbers. We are the centers where these families move. In the case of Davidson and Shelby counties especially, but in each of the urban counties, children are arriving for whom English is not a language yet at all. The cost of that is being placed on local school systems. They simply open up school in the fall and find that 10% or more of the kids in the classroom don’t know how to say hello, never mind how to work algebra.

Wharton: Our formula now is based on the premise of making sure everybody is treated equally, whether that be poorly, or badly or whatever. We use phrases such as equality, and equity, as opposed to what is adequate without regard to big or small counties. We have focused on equity, and the focus ought to be on what is adequate.

Ruble: Will a hold harmless provision be required to push this thing through the legislature?

Ramsey: We are proposing and have always proposed the hold harmless provision. We don’t want to take money from another county. We just think that the amount we are getting is not a fair share.

Ruble: Mayor Ragsdale, what about you? Knox County receives the second lowest percentage of funding support for education, yes?

Ragsdale: We have an obligation to help the counties that don’t have the economic prosperity or means to help themselves. One that comes to mind is Hancock County in East Tennessee. I don’t think anyone minds helping Hancock County. On the other hand, we sit adjacent to some school systems that have almost identical economic levels as we do, and yet they are receiving several hundred dollars more per child than Knox County children. Multiply that times 52,000 kids and we are talking about millions of dollars. So obviously something is broken with that system. The other thing is the system right now is not transparent. No one can figure out the rhyme or the reason behind the 40-plus variables that are a part of the BEP. It needs to go back to something more basic where our citizens can figure it out and certainly where our elected leaders can figure it out.

Ruble: The gears of bureaucracy move slowly. Meanwhile, a student’s 12-year public school experience slips by. How are you going to get movement on this issue sooner than later?

Wharton: This state used to be known as the three great states of Tennessee—East, Middle and West—and the signs as you entered the state showed how it was separated. On this particular issue those divisions are a thing of the past. There is a group in Memphis that is communicating daily with Mayor Ragsdale on the other end of the state, as well as with the office of Senate Education chairman Jamie Woodson. That’s helping move the issue.

Ramsey: We’ve met with the governor three times. We continue to talk to members of our respective delegations. But it is going to take years to fund it. We’ve got no chance if we say we want it, and we want it right now. That’s not going to happen. Ragsdale: Going forward, I would like to see the General Assembly along with the governor make some systemic changes. First of all, say “we’re going to fix this formula.” Then over a period of three to five years, provide the dollars it’s going to take to make it happen. That way, we don’t take dollars away from communities right now that have been receiving them. That would cause them hardship. Alternatively, as the state continues to grow economically, use those new dollars to implement the plan faster so that you are giving a fair opportunity for every Tennessee child to get a great education.

Ruble: Clearly, the additional burden for funding education is on the urban counties. And yet some of you, particularly those located on the state border, have argued that you don’t have the needed local taxing authority necessary to address your own financial problems. Mayor Wharton, despite the “no new taxes” mentality that has permeated the General Assembly in recent years, there appears to be more support for granting this greater autonomy than in previous years among both the legislature and interest groups. As a former public defender, what is your best argument for greater local authority to levy taxes without state approval?

Wharton: When we’re railing against lawmakers in Washington at the state level, we always say, “Let’s take care of it back in Tennessee because we know what the people need.” Now we at the local level are simply asking the state legislature to preach here in their court what they preach when railing against Washington. We think that the folks back in Shelby County, Knox County or wherever are much more in tune with their own needs. It’s particularly true when you have a state as diverse as ours in terms of economy, and in terms of the competition that we have from the bordering states. We are in a very difficult situation down in Shelby County when it comes to economic development. So, the people in Shelby County may have a different view of alternatives to the property tax than someone in Williamson County or Davidson County. We know that our competition is not with our bordering Tennessee counties but with our bordering states, which have totally different economies and totally different tax structures. The people in my jurisdiction have spoken clearly that they want an alternative to the property tax. We have the greatest demand placed on any level of government--schools, law enforcement, public hospitals—and yet we have the least number of revenue alternatives.

Ruble: Obviously, the preferred route to revenue growth is job growth and economic prosperity, not tax increases. Talk about industry recruitment efforts in your respective counties. And how has the state been as a partner in those?

Purcell: Economic development is an issue that these four county mayors work hard on every day, and frankly, we’ve had some very good success over the course of the last several years. We now rank nationally--each of us has a ranking nationally—with regards to being a destination for business expansion or relocation. Nashville, over the last two years, has been first for expansion and relocation of business nationally. The companies that have recently relocated to Nashville each acknowledged very openly that while Tennessee had done the same or less than what many states would have done, they nonetheless located here based on quality of life issues, which involved education, health and safety and other things that make a place special and make you want to live there and hope your kids will live there and your grandkids will live there. In the case of Nissan, which is the largest corporate headquarters relocation in my public service and which is coming here to Middle Tennessee, the state didn’t just do what other states might have done, but, in fact, was extremely aggressive. Nissan said openly that this was a place where they saw themselves living and believed that their futures would be secure and felt good about the workforce and its productivity here. But it was also critical that the state and Governor Bredesen stepped up and provided something that was very competitive. I don’t think Tennessee or any of these cities or counties believes that we can buy the love of every company in this country. But I do think there has to be a constant attention to the balance.

Wharton: All of us in the room realize that tax incentives are only one piece of the package. Tax incentives will run out in seven years or 10 years or whatever; but if you’ve got a good workforce it will last a lifetime. And that’s where we in Shelby County have really got to get some help. One of our greatest needs is workforce development. We’ve got the biggest county and the highest number of individuals who are underemployed and unemployed. And if we could just get greater assistance from the state to improve the quality of our workforce it would really be a big, big help to us. Also, let me say this with regards to economic development. The education component is all-consuming because it’s tied into everything else that we do. If we don’t get that right, then all these incentive packages, excuse my Memphis, ain’t worth two dead flies.

Ruble: Mayor Ramsey, what about the recent decision by South Korean automaker Hyundai to pass over Chattanooga in picking a location for a Kia plant? Some in your area have said the state needs to do more from an incentives perspective.

Ramsey: The state’s been a good partner with us so far. There is pending legislation that would give the governor more flexibility on front-loading some of these incentives rather than back-loading. Kia, the site selectors, paid us a couple of visits, and I believe that Kia located where it located because it wanted to be close to the mother ship down in Alabama. But in the discussions that I’ve had with the governor, when the time comes and a company wants to be here, I believe we’ll be competitive. I think he does need just a little more flexibility on front-loading some of the benefits. We are concentrating on that manufacturing niche, and that whole industrial park out there, Enterprise South, is dedicated to manufacturing.

Ruble: How about the work involved in holding on to the state’s existing companies?

Ragsdale: We don’t have much flat land in East Tennessee. Our niche has to be something a little different than manufacturing. So we are trying to focus on technology. And while we’re not turning down any type of manufacturing jobs, we feel like we’ve got an advantage with the Oak Ridge National Lab, the UT Battelle connection, and the Spallation Neutron Source, which is coming online. Many times, technology jobs don’t gain huge headlines initially because you are starting out with companies that may have five, eight, 10, or 15 employees. But every now and then you are going to get a hit like a CTI Molecular that grows to 700 or 800 employees. And homegrown employees are really pretty good because you don’t have huge recruitment expenses. We’ve seen for years great ideas come out of U.T. and the Lab that end up in places like Boston and North Carolina and California. Our goal is to figure out some way to keep more of those businesses in Tennessee, and we’ve had some success. Just this week we’re meeting with four entrepreneurs to find out what we can do better to help our technology-based business sector grow. So we want that to be our niche, and if it locates in Knox County, that’s great, and if it’s an adjacent county, that’s okay too, because we think we get some benefits out of that. More than likely the contractor who will be building the company will be one of ours, there will be banking in our county, they will attend our sporting events, our opera, our symphony.

Ruble: You allude to the role of regionalism in economic development. Can you expand on that concept?

Ragsdale: Over the past several years, we’re working closely with the surrounding counties, and we’ve come to the conclusion the if something is good for Blount or Anderson County, it’s also good for us. Conversely, if it’s good for us, it’s good for Union and Loudon. So, more than ever, we’ve started to see this regionalism have an impact. We’ve set some very ambitious goals, and in the last two years we’ve had 11,000 new regional jobs, one of the lowest unemployment rates around and are seeing family incomes go up. And I think that spirit of regionalism is what has made that happen. Approximately 6,000 Knox County residents work in Oak Ridge. The average payroll that comes across the Solway Bridge every afternoon is around $60,000 annually. Those are good jobs. I’m really interested in what’s happening in Oak Ridge and Anderson County, even though I’m the Knox County mayor. And I think it’s incumbent that we not fight with each other as much as we try to close our borders and grow inside Tennessee. And if we can do that, I think we’ll all be better off.

Wharton: We’ve got to do a better job of what we call mission distinctiveness. Once a given county has said, “Here is where we wish to excel,” once we identify those areas in which we’ve developed some synergy, then it makes sense to get that support. We’ve done that in Shelby County—we will soon become one of the largest medical implant centers in the world. We’ve got Smith & Nephew, Medtronic Sofamor Danek, Wright Medical, and we’re backed up by the biotech sector. We’re not going to run up there and say, “Governor, what’d you do for Claude Ramsey down there, and why haven’t you done that for us?” Instead we say, “Here’s where we are, here’s where we’d like to go and here’s where it fits.” We’re not asking for a shotgun. Give us a rightful approach, and let’s tailor the incentives to what we’ve already got started.

Purcell: Let me say one thing. It should be pretty clear here that one of the advantages that we have is that the four of us like each other, we get along, we understand each other, we appreciate each other. We come from different regions of the state, different time zones and there might even be different political parties represented here. (laughter) But you wouldn’t know that. And whether we are meeting with the governor or we are meeting with you, this really is a group of four mayors that like each other and are committed to working on these issues. If it’s ever been better in that regard in the state I don’t know, but it’s about as good as I think it can get. Ramsey: In my twelve years, I have not seen it any better.

Ruble: Staying on the topic of growth, there was a time in Shelby County when zoning and planning regulations were essentially disregarded. There are examples in East Tennessee of individuals and developers building on the peaks of mountaintops or vistas, an act that some in the state believe is destroying the integrity of something that arguably belongs to all of us--our state’s physical character. What efforts are underway to promote smart growth in your areas?

Ragsdale: One thing that has to be completed in our county when you look at smart and sustainable communities is that we need to change some of our zoning laws and make it easier to do the right thing. It needs to be the exception and not the rule where you have to get variance after variance to make something good happen. Regarding mountaintops, you make a very good point. We’ve got to preserve some of these ridges and we’ve made some progress in that regard. Adjacent to some of our park property, we have actually bought ridges. In other cases, some of our developers said if we can do cluster homes at the base of the ridge, we’ll let you have the ridge for park space, and walking trails and community preservation. That’s worked out well.

Wharton: One of the first conferences I held as an elected official was on sustainable communities. In Shelby County, we cannot afford to build new infrastructure when we have so much already in place in the core of the city. There has been a sea change in the public mentality regarding this topic. Twenty years ago, if you had said to somebody in Shelby County, “we are going to have a charette,” they probably would have said “we don’t do that because we’re church members.” (laughter) Some people might think a city like Memphis would not welcome all of this fancy planning and development stuff that they do in Berkeley and Boston. But now an appetite for it. People really see the benefits. Now they want it.

Ruble: Right or wrong, increased oversight of things like planning and zoning in the name of overall community benefit often translates in the minds of businesses owners and developers as an anti-business stance. Talk about the efforts of your local government to be business-friendly. Is that a focus?

Wharton: I take it on my own to visit local employers just kind of on a cold call, not going in to sell anything. You’d be surprised at the reaction. I was visiting one of our best employers, and I was talking with the president and I said, “Let me ask you, if you had something you needed done, say a traffic light out here where employees were in danger every time they pulled out of the parking lot, how would you go about accessing government?” He responded, “I don’t know.” That’s the gravel in the shoe, when you’ve got a major employer with an MBA running it who really doesn’t know.

Ragsdale: Two highlights of my week are going to read to school kids and visiting businesses. I visit two businesses every week, and this week I visited number 357 since I’ve been in office. Some of them are really big companies, but some are little businesses who are just driving, collectively driving, your economy. I visit some companies that provide three jobs, but those three jobs are sending three families’ worth of kids through college. That’s important.

Ramsey: And they are usually good jobs.

Ruble: Interesting conversation, gentlemen. Thanks.

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