A Vanderbilt University professor suggested that city officials should spend more on snow removal by creating a "winter storm" tax.
Assistant Professor of Finance Jesse Blocher wrote a report saying that the local economy loses out in millions of dollars when the city shuts down because of snow and ice, especially when schools are closed.
By investing in more resources to remove snow faster, it would get businesses back running, employees working, and customers buying, according to Blocher.
Blocher stated that $64 million of GDP (Gross Domestic Product) is lost per day from 13 percent of the workforce impacted by students having to stay home.
"It costs the city of Nashville a fair amount of money for Metro Public Schools to be closed," said Blocher.
In recent years, it costs Metro Public Works more than $300,000 for overtime and resources to clear roads.
Blocher argued that a tax would help fund more resources to treat roads faster and avoid an economic hit.
"When there is some sort of ice or snow event, that that would automatically trigger some provision that would generate some small surcharge on property taxes or business taxes that would flow to Metro government," added Blocher.
It's still too early to calculate the final cost for the winter events this year, according to city officials.
In a statement to NewsChannel 5, a Metro Public Works spokesperson said,
"We understand that all Metro departments have requests and priorities. Here at Metro Public Works, we evaluate our equipment needs with Metro Finance and General Services. Our winter weather varies from year-to-year, with some years having very little winter precipitation. Our plan is to treat primary and secondary routes first, and then treat customer requests. Our current fleet is sized to achieve this plan. Everyone involved in Metro government understands the program we have, and supports us to the extent possible in the metro budget. Public Works continually monitors and evaluates our priorities based on our current needs in collaboration with other departments."
To learn more, read his report below:
Thesis: Nashville should spend more on snow removal, and pay for it with a "winter storm" tax.
The most recent estimate of Nashville's GDP is $124,243M, according to the St. Louis Federal Reserve Bank. Assuming 252 working days per year, that is $493M per day.
How much of GDP is impaired by a snow day?
If we (conservatively) assume just 1.5 adults are impacted by each MNPS student, that is 127,500 adults, or 13% of the total Nashville workforce. This number is likely higher, because it omits private schools and preschools (who often cancel since preschool teachers have older kids in MNPS, for instance). The families least affected by snow closures are families with two parents where only one has paid employment. Even parents who work from home will find productivity impaired if they are expected to manage children not at school. I think 13% is a conservative estimate of impairment.
Thus, assume that 13% of GDP is impaired. This includes multiple factors: employees not able to come to work, businesses that must close (even if employees can come to work), reduced customer traffic and/or cancellations due to unsafe transportation. This does not include hard-to-measure costs like stress and anxiety of workers who do make it to work, nor does it include the cost of accidents, which increase in inclement weather.
13% of Nashville's GDP is $63.8 million dollars. Compare that to an estimate from 2015, in which Metro Public Works spend $350,000 over several days of a massive snowstorm ("Cost of Nashville snow, overtime still adding up", Feb 20, 15 by Joey Garrison).
$63.8M is approximately 182x that amount. Then, recall that the estimate is $63.8M per day lost, not per storm.
Many argue that Nashville is a southern city with infrequent snow storms. They are correct. But these are computed as lost GDP per day. The primary impact to Nashville seems to be not the initial storm, which perhaps should shut the city down for a day. Instead, as we see now, a single storm can cause a multi-day school outage due to unsafe roads in some portions of the city. Even 5% of GDP per day is $24.7 million.
I am certain that Metro Public Works is performing heroically to clear our city streets. What I am proposing is that there is a solid and clear argument that Nashville should increase spending on snow removal. If it were to spend an addition $1M that was able to allow schools to open just one day earlier, this investment would garner a return of 6,300%.
How to pay for this? It is hard to increase allocations for budgetary items that are rare: snow storms that cancel school are indeed rare and we should be wary of allocating extra money that may sit for a few years before it is needed. I propose instead an "winter storm tax" when there is a snow or ice storm. Upon an event being declared (the details of which I leave to others more knowledgeable), there would be an immediate small surcharge on business and property taxes, to be collected that year. This way, the additional cost for removal is automatically paid for only in years when it is necessary. I leave the details of how to allocate this additional money to maximize road clean up to those who know more of such things.
My primary point is that the economics of school closures dictate that we, as a city, are under-investing in snow removals, and the return on investment to such an project would be very high indeed.
