VOL. 127 | NO. 76 | Wednesday, April 18, 2012
Wharton Budget Plan Includes Alternatives To 47 Cent Tax Hike
By Bill Dries
Memphis Mayor A C Wharton Jr. took a $628.3 million city operating budget proposal Tuesday, April 17 to the Memphis City Council with a 47-cent property tax hike proposed to meet the city’s obligation to fund Memphis City Schools.
But Wharton also included in the budget address options short of the full 47-cents that the council might consider. And several council members said immediately that they could not support the tax hike.
Wharton said for now the budget proposal includes no layoffs but was quick to add that he couldn’t guarantee that would remain the case except for his vow to avoid any layoffs of police officers and firefighters.
Wharton touted cuts of $24 million from the operation side of city government that he said later would likely show up in library closings or cutbacks in hours of operation as well as cuts in park services.
He also said the budget proposal is $22 million more than the current fiscal year, reflecting a decrease since 2009 of $17 million in property tax revenue as well the end of federal funding for some police programs and the higher cost of gasoline and other costs to maintain existing services.
Wharton said the 47-cent tax hike which includes keeping the 18-cent one-time-only tax hike approved by the council last year but not levied is “solely for the purpose of meeting our court-ordered obligations to Memphis City Schools.”
The council rolled back the tax rate by 18 cents in 2008, in the process reducing the city’s funding of MCS. The school system took the city to court over the funding cut and won the court challenge.
“We have exhausted all of our legal remedies and all our reasonable financial alternatives,” Wharton said of his tax hike call.
But Wharton also suggested the tax hike proposal could be cut by 10 cents if the city used $9 million it will get from the recent sale of the old Defense Depot property in South Memphis. And he also said using approximately $20 million from OPEB (Other Post Employment Benefits) funds the city is required to hold is another “unconventional” option.
“There’s no such thing as a good tax increase,” Wharton told the council. “I want to assure the council that a tax increase was not reached by default.”
But several council members said they weren’t convinced a tax hike is necessary or wise.
“This is the largest budget in the history of the city of Memphis,” council member Jim Strickland said. “We need to start with the belief that Memphis and Memphians cannot afford a tax increase.”
Strickland said an increase in what is already the highest property tax rate in the state of Tennessee could prompt more Memphians to leave the city.
But council member Joe Brown denied there was such an exodus.
“Nobody’s going to leave Memphis,” he said. “That’s just a myth for those who want to keep Memphis stagnated.”
Brown said he would oppose any layoffs or pay reductions.
“People pay taxes for services. We must deliver them,” he said. “Not one member of this body has the right to threaten another person’s livelihood. … A few nickels and dimes is not going to hurt.”
Council member Janis Fullilove suggested the city push for legislation to approve a payroll tax that past legal opinions by the state Attorney General’s office have held would have to apply to Memphians as well as those not living in Memphis who work in the city. She also suggested nonprofit organizations and companies receiving tax breaks through payments in lieu of taxes (PILOTs) should contribute more to the city in the way of taxes.
Council member Kemp Conrad said the city’s budget process has been “rather dysfunctional” in recent years with “lots of crazy questions about food and travel.”
He also said promises of committees and studies should stop.
“Not this big charade we’ve been through,” he said. “We should right size city government once and for all. If we can’t get this budget right this year, we don’t deserve another year.”
In other action Tuesday, the council approved on a 7-6 vote a wood chipping and mulch processing operation by MTL Environmental LLC at Knight Road and Getwell Road over neighborhood opposition.
It also delayed for two weeks a vote on funding for plans for the Wolf River Greenway between McLean Avenue and Hollywood Street to get an overall cost for the project on a motion by council member Bill Boyd.
And the council delayed for two weeks a vote on $236,322 funding for the Marble Pump Station Outlet in North Memphis to repair erosion on a bank near the outlet. Brown moved for the delay because of questions about the level of minority participation in the contract.