The pair of questions the Memphis City Council is considering for the Nov. 6 ballot is another chapter in the council’s nearly five-year debate about the size and role of city government.
The council Tuesday, July 17, approved on third and final reading the referendum ordinance that puts a half percent local option sales tax hike proposal to Memphis voters.
Council member Shea Flinn, who proposed the ballot question, says the estimated $47 million in revenue the tax hike would generate is one way of solving a heightened budget problem coming the city’s way.
The problem is an estimated $25 million gap between revenues and expenses for the fiscal year that begins July 1, a higher debt service payment and a drop in property tax revenue from the 2013 property reappraisal that Flinn puts at a 5 percent or $15 million hit.
“There is a desire in politics to find happy choices,” he said. “ I wish that were true. There are not happy choices.”
The other alternatives, according to Flinn, are a property tax hike or drastic cuts to city services that would affect police and fire services.
Not everyone on the council agrees.
“I don’t think it’s been proven that we need this huge increase,” budget committee chairman Jim Strickland said. “There’s going to be extra money to be spent, which is going to remove any incentive to make further cuts. … As long as the city continues to fund non-essential services, we have not done everything we can to avoid higher taxes.”
Strickland also argues the sales tax is a regressive tax that the poor and rich and in between pay on essentials such as food and prescriptions.
Council member Kemp Conrad said Flinn was posing a “false choice.”
He advocated “reforming city government.”
“A lot of it takes a little bit more leadership,” he added. “We need to talk more about that instead of a false choice.”
But council member Reid Hedgepeth said the votes aren’t there on the council for that or raising property taxes after repeated tries at both. Ten of the 13 council members have been on the body since 2008 when the largest turnover ever on the council was followed by a property tax rate rollback and the largest ever return of incumbents to the council in its 44-year history.
“Since we’ve been here … we’ve reduced city property taxes by 11 percent,” he said. “In my opinion, as we go through each one of these budgets there are not seven votes to go raise property taxes and there’s not seven votes to go significantly cut our budget. … We’ve got to ask ourselves what decisions are we left with.”
He also proposed the council set aside half of the revenue generated by the sales tax hike to reduce the city property tax rate.
Council member Wanda Halbert argued for some options that tax others who work in Memphis but live outside the city and outside Shelby County. She later voted for the ballot question.
“At some point, the city is going to have to stop pursuing solely the taxing of its poor,” she said. “The only remedy that has been put on the table repeatedly has been taxing the citizens of Memphis.”
But Flinn said the council has a better chance of “collecting on a unicorn tax” than winning approval of a state income tax or a payroll tax from the Tennessee Legislature. He also argued a property tax hike would be regressive as well and that the best option is to let citizens vote on the option so the council knows what they want.
Strickland remained unconvinced.
“The cuts required to balance the budget would be about 4 percent of the city’s budget,” he said. “I believe it’s easier for City Hall to cut 4 percent of its budget than it is for the people of Memphis to pay 5 percent more on their food and prescriptions.”
Meanwhile, the council votes at its first meeting in August on third and final reading of a referendum ordinance that would add a proposed 1-cent-a-gallon gasoline tax to the Nov. 6 ballot in Memphis. The revenue from the local gas tax would go to the Memphis Area Transit Authority.