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VOL. 123 | NO. 59 | Tuesday, March 25, 2008

Despite Resignation, Herenton Still Faces Budget Headache

By Andy Meek

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Willie Herenton

Almost as soon as word spread of Memphis Mayor Willie Herenton's bombshell announcement that he intends to leave office at the end of July, the guessing game began.

Speculation was rampant among the general public and in the political and media establishments over everything from Herenton's expected bid to become the next Memphis City Schools superintendent to how a transfer of power would occur at City Hall.

Meanwhile, the resignation announcement temporarily has overshadowed
the difficult budget year facing the city and how the mayor will use his remaining
time to confront it. But that might change soon.

And when that happens, it is likely to reveal that the circumstances surrounding Herenton's departure as the city's chief executive are really only a prelude to the last chapter of his life in elected office.

Bearer of bad news

By scheduling his resignation to occur at the end of July, Herenton will exit the political stage on the heels of what he's already acknowledged will be a tough budget season. Next month, the mayor will present his final budget proposal to the Memphis City Council, a proposal he's already acknowledged will include a property tax increase and potentially painful cutbacks in services.

"The reality is city government cannot be all things to all people," Herenton said to council members two days before he announced his resignation.

Moreover, because Memphis has not been immune to the volatile economic forces that local governments across the country are now faced with, there's a good chance that the last chapter of Herenton's story as city mayor will unfold very much like the first.

The mayor regularly touts the city's bottom line in his public speeches and at political functions. But when he faced his first budget season the year after he took office in 1991, Herenton saw a financial landscape that bore some similarities to today's.

Skimming the till

After years of his mayoral predecessor, Dick Hackett, regularly dipping into the city's reserves to avoid property tax increases, Herenton got the City Council to approve a 53-cent tax hike during his first budget season. The next year, another increase followed.

One influential factor was a glut of successful appeals of property reappraisal values, which resulted in the city not collecting as much as it expected. And with many officials speculating that the tax base will shrink countywide after the 2009 reappraisal, a similar result may occur next year.

Some time in the next several weeks, the mayor plans to make a return trip before the council to follow up on the suggestion he made last week that the city close five libraries and four community centers to save money. The mayor painted that recommendation, which came out of an efficiency study whose funding was approved by the council, as a tough, principled stand.

And making tough choices in pursuit of his political goals is something Herenton has never shied away from doing.

"When I have a mission, I'm focused," he said in an interview with The Daily News in the seventh floor conference room at City Hall shortly before he won re-election in October. "I'm unrelenting, steadfast."

'Additional revenues'

The mayor generally has stayed away from the spotlight in the days following his resignation announcement and spent the holiday weekend mostly in private. But a few details already can be surmised about the budget plan he'll soon present to the council.

For example, the administration likely will portray it in terms of a balancing act. In a conversation with The Daily News a little more than a week ago, city finance director Roland McElrath said the determination had not yet been made what level of city reserve funds would be used to hold down a tax increase.

The city's most recent annual financial report shows a surplus of city reserves. Higher-than-expected tax collections and spending cutbacks resulted in a more than $44 million increase in the city's general fund at the end of the most recent fiscal year, according to the report, which is current as of June 30.

"I think it would be premature to discuss what our request might be to the council," McElrath said when asked how the city's surplus would affect any tax increase decision. "Over the last two years, the city has made a concerted effort to manage our activities and our resources such that we generate operating surpluses at the end of a fiscal year. Our primary goal has been to restore and rebuild our fund balance.

"And so we've been successful at doing that, by generating an operating surplus in fiscal '06 and now again in fiscal '07. But in order to continue to deliver the level of services that we think the citizens deserve and demand, there will need to be some additional revenues generated in fiscal '09."

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