VOL. 127 | NO. 57 | Thursday, March 22, 2012
Council Nixes One-Time Tax Hike
By Bill Dries
Almost a year after they approved a one-time, 18-cent property tax hike, the Memphis City Council this week rejected levying the additional tax bill.
And even the council’s most disparate elements were together, at least for now, on what they feel was a lack of follow-up by Memphis Mayor A C Wharton Jr.’s administration on the fine print that came with last June’s decision.
The sentiment is expected to be present at some level when the new city budget season begins next month.
“We’ve had a lot of talk at City Hall about reforming city government,” said council member Jim Strickland. “But frankly there’s been little action.”
In rejecting the tax hike, the council adopted the use of $10 million from the city’s reserve fund and $3.2 million from a voluntary buyout program for city sanitation workers that hasn’t been pursued by the city administration.
“Hopefully the mayor will come to us. He’s the most powerful person in city government,” said council member Kemp Conrad, who proposed the alternative to the tax hike. “He needs to come advocate strongly for what he wants the city to look like. We have a $50 million deficit next year. And coming with various proposals and whatever is blowing in the wind is not going to cut it.”
Wharton said last week that he would offer the council “options” for closing a $17 million shortfall in the city budget for the current fiscal year. At Tuesday committee sessions, the administration’s estimate of red ink had fallen to $13 million.
Wharton did not advocate using any of the city’s $81.1 million reserve fund. His list of budget cuts included delaying the next recruiting class for the Memphis Police Department and delaying city payments to its OPEB – Other Post Employment Benefits – obligations to the tune of $5.2 million.
The council soundly rejected both of those options and instead took money out of the budget for a reform agreed to last June that the administration hasn’t moved on.
“The bottom line is we agreed to a budget compromise last year. We’re almost nine months into it. The two most controversial pieces were never implemented as we directed the administration to do,” Conrad said, referring to the sanitation buyouts and the 18-cent tax hike. “We’ve got to restructure and right-size city government once and for all. These Band-Aid approaches don’t work – the one-time money gimmicks, the tax increases – we need to come up with a sustainable plan.”
Conrad said the $10 million use of reserves still leaves the reserve fund at 10 percent of the city’s operating budget, which is the recommended percentage of bond agencies and which includes a $2 million cushion.
The council approved the 18-cent tax hike in June as a way to pay the city’s obligation to Memphis City Schools. But what came with the deal was an agreement by Wharton to take steps to change the structure and size of city government.
Then the city advanced other money it already had without levying the tax to pay city schools, in hopes city revenues would increase enough in the interim to balance the budget. That didn’t happen.
Strickland cited an agreement to have a services plan for all of city government outlining cost savings within 60 days of the June vote.
“That plan, we learned this morning, has never been done,” he said.
A study of solid waste management staffing and operations fared better with $3.5 million in savings next fiscal year, still short of the $5 million goal. Savings for the following year are “still being studied,” he said.
“Instead of acting on this opportunity to restructure City Hall, the administration gave a $6 million bonus,” Strickland said, referring to employee bonuses in December.
Wharton has said the bonuses were from a surplus at the end of fiscal year 2011 and didn’t come from the current fiscal year.
Council member Janis Fullilove joined those supporting the Conrad resolution after she and Conrad clashed on whether the voluntary buyout of sanitation workers is gone for good.
Fullilove sought an amendment in which the council would say the buyout program is “on the back burner for now.”
Conrad declined the amendment. He has favored privatization of those services.
“You don’t know what it’s like to be poor,” Fullilove responded.
“I wouldn’t comment on my background,” Conrad replied. “You don’t know it.”
Last year, Fullilove was among those who voted for the buyout. But weeks later she said she didn’t know what she was voting on and added that she feared the program would be used to gain a foothold for privatizing sanitation services.