VOL. 129 | NO. 7 | Friday, January 10, 2014
Luttrell: Financial ‘Perfect Storm’ Over
By Bill Dries
Shelby County Mayor Mark Luttrell doesn’t see the storm he saw last year at about this time.
At this week’s Memphis Kiwanis Club meeting, Shelby County Mayor Mark Luttrell said he doesn’t see the financial storm in county government he saw last year.
(Daily News/Andrew J. Breig)
It was at this point about a year ago that Luttrell and others in county government were talking about a “perfect storm” in county finances.
“We have stabilized somewhat,” Luttrell said Wednesday, Jan. 8, before giving a state of the county speech to the Memphis Kiwanis Club. “Last year we were facing devalued property. We were facing schools that needed more money. We were facing the city of Memphis that was withdrawing money from the schools. There was the perfect storm in many ways. … I don’t see a storm this year. I see us trying to get back to some semblance of normalcy in terms of planning and projecting our future.”
At the end of last year’s county budget season, the Shelby County Commission approved a $4.38 county property tax rate, 36 cents more than the old rate of $4.02. Thirty cents of the increase was to generate the same amount of revenue county government got from the old rate after a historic drop in property values for tax purposes. The remaining 6 cents was a tax increase to create half of the $20 million in new funding county government provided to the consolidated school district.
The tax hike didn’t come without a lot of debate and some delay. The County Commission gave final approval to the new tax rate on July 22, after the July 1 start to the new fiscal year.
And county government wasn’t alone in being between a rock and a hard place.
The Memphis City Council also raised the city property tax rate by 4 cents after an additional 25 cents to generate the same amount of revenue as the old $3.11 tax rate.
The current $3.40 city property tax rate reflects the same drop in property values in the countywide property reappraisal.
Property tax rates also went up in Shelby County’s six suburbs.
“I don’t see any reason for a property tax (hike) this year. I really don’t,” Luttrell told reporters Wednesday. “Our revenue projections are looking about the same as they did at this time last year. But there are some of the efficiency measures that we’ve tried to introduce, some of the innovative approaches we’re trying to make to government. They are going to realize some savings that will allow us hopefully to look at some things like pay raises.”
That’s not to say Shelby County government doesn’t face financial challenges.
They aren’t the challenges the city of Memphis faces in the form of an estimated $709 million unfunded pension liability.
“We are insuring that we make the full payments to our pension fund,” Luttrell told the group of 80 at the University Club as he said the county’s liability is funded at approximately 88 percent. “We are making the full financial contribution required there. We’ll continue to make those payments as aggressively as we can.”
But Luttrell also acknowledged county government is exploring the kind of changes to retirement benefits that city leaders are considering.
“I think we probably will see ourselves moving more toward a defined contribution plan,” he said.
The county’s debt stands at $1.4 billion after reaching a high of $1.8 billion. The peak was reached at the start of the administration of Luttrell’s predecessor, A C Wharton Jr., who is now Memphis mayor. Wharton also put in place the county’s debt reduction plan and pay-as-you-go fund that county government continues to use to pay down the debt. That includes a cap of no more than $75 million in new debt a year.