Wharton Outlines Painful Budget Scenarios

By Bill Dries

Memphis Mayor A C Wharton Jr. has four plans for dealing with a projected $70.4 million deficit in the new fiscal year.

The tentative options sent to Memphis City Council members Thursday include an 18-cent increase in the city property tax rate and laying off between 659 and 2,110 city employees.

The balance sheet of options given to council members does not refer to the 18-cent increase as a tax hike, but instead refers to it as “tax rate restoration.”

The council in 2008 rolled back the property tax rate by 18 cents when it cut Memphis City Schools funding by $55 million.

The $70.4 million deficit doesn’t include paying MCS back the $55 million, as two courts have ordered the city to do. With that amount added, the total amount of red ink Wharton is dealing with $125.5 million.

That total assumes the $55 million would be paid in one lump sum. Some of Wharton’s scenarios include options in which the city would pay MCS in several installments over several years or would offer MCS a lower lump sum of $42.3 million and drop all connected litigation.

The Wharton administration budget figures show bringing back the 18-cent reduction would get the city $20.6 million toward the goal.

All four options include transferring $20 million from the city’s debt service fund, the fund that pays off bonds used to finance construction projects and other one-time city expenses that are not operating costs.

One scenario combines the debt service transfer with laying off 2,110 city workers, which would result in a $105.4 million savings and reduction in city services.

The dollar figure is based on an average annual salary of $50,000 per city employee.

Two other scenarios combine lesser numbers of layoffs with salary reductions and furloughs. The combination of salary reductions and furloughs in each option contributes an additional $13.2 million toward the goal of a balanced budget.

Three of the four scenarios include $20 million in new revenues from the city selling the collection of delinquent property taxes to a private firm and another $10 million for “monetization of parking meter revenues.”