VOL. 123 | NO. 75 | Wednesday, April 16, 2008
Payroll Tax Idea Rides Again
By Bill Dries
LEADER OF THE PAC: The Shelby County Board of Commissioners' Steve Mulroy led the return to a campaign for a payroll tax this week. -- Photo By Bill Dries
The idea of a payroll tax is back just two and a half months after it was declared dead by Shelby County Mayor A C Wharton Jr.
The Shelby County Board of Commissioners this week approved a resolution backing legislation in Nashville that would permit a tax on income earned within Shelby County by residents and nonresidents.
Such a tax, if approved by the Legislature and again by the commission, would apply to people earning $28,000 a year or more. It also would be accompanied by a reduction in the county property tax rate.
But it would not be revenue neutral. Thirty-percent of the revenue from a payroll tax would go to reduce the property tax rate.
Where politicians fear to tread
The pledge of a tax rollback was a key element for Wharton, who has had no luck even finding a sponsor for payroll tax legislation among the Shelby County delegation to Nashville.
"That's a major difference here," he said. "It would be very difficult to dismiss it out of hand."
But any legislator looking for a unanimous stand on the proposal will take note of Monday's 7-5 commission vote. Legislators often look for unanimous backing locally in deciding whether to take a chance on the riskiest political proposition that can be put in writing and put in the hopper - tax legislation.
Meanwhile, several commissioners said they aren't convinced every possible method of cutting expenses is being looked at as an option.
"I don't believe the business community or frankly many of the taxpayers of Shelby County believe we have a revenue problem," said Commissioner Mike Ritz, who came to Monday's committee session with a list of 17 budget cuts he said could eliminate the need for a property tax hike over the next threee fiscal years. "They believe we have a spending problem.
"I don't think the average taxpayer in Shelby County is real concerned about losing 300 jobs in county government," he said, referring to the Wharton administration's option of laying off 270 county employees to deal with around $25 million in red ink.
Penny Off the Tax Rate For Your Thoughts
These are some of the ideas county commissioners are considering:
Payroll tax with 30 percent of revenue going to reduce property tax rate.
No pay raises for county employees.
Lay off up to 270 county employees.
Buyouts of county employees at or older than retirement age.
Close and sell Orgill Golf Course.
Pay part-time county attorneys by the hour instead of putting them on retainer.
Limit the number of non-civil service employees appointed by elected officials.
Cell phone tax.
Sell naming rights to various county-owned facilities.
Merge fire services with the Memphis Fire Department.
Charge Lakeland and Arlington for law enforcement.
Cut all Juvenile Court detention.
Ritz said there is a "lot of pain and suffering" to come in the budget decisions the commission makes.
"I don't support pain and suffering for those who are already in pain and already suffering," Commissioner Mike Carpenter said to Ritz before joining Ritz in opposing the payroll tax. "There are definitely some needs in this community that require additional revenue. ... The privilege (payroll) tax not only on working families is harder. But I also think it's discouraging to businesses coming into our community."
Accountability doesn't come cheap
Commissioner Wyatt Bunker likened the situation to defensiveness he said he found as a Shelby County Schools board member.
"The point is that we were able to starve government into accountability. I think that's the only way you can do it," he told commissioners. "I think this budget crisis, as we call it, has created a perfect storm for us to be able to starve government into accountability and that's what I'm for doing."
"Starvation leads to death," replied Commissioner Sidney Chism, who in another budget metaphor called on the commission to use "a scalpel not a hatchet" in making what still will be difficult cuts.
"We are in the operating room ... and we've got to do what we've got to do," he said. "This is not ordinary times. ... We're not going to be able to sustain government as we know it."
Wharton called it a day on his campaign for payroll tax legislation in late January. The same day he told the commission, Commissioner Steve Mulroy pushed for and won commission support for state legislation permitting a 2 percent tax - effectively a sales tax - on food and beverages served in restaurants.
At the time he argued it was a voluntary tax that would only affect citizens who are better off financially. He backed away from that after restaurant owners voiced vehement opposition to such a tax.
Mulroy sponsored this week's resolution endorsing the payroll tax legislation.
"The bottom 50 percent of people in Shelby County will not have any
(payroll) tax at all, which is better for the poor than imposing the food and beverage tax. ... They really end up having to go out and eat," Mulroy said. "Let's not kid ourselves. Any sales tax is inherently regressive."
He also added that he hasn't heard any opposition to a payroll tax proposal that includes a property tax rollback.
Budget committee chairman Deidre Malone assured him that would change.
"We know we're going to hear from them. We know they're not going to like it," she said referring to business and corporate leaders who consistently have been the most vocal and formidable opponents of payroll tax proposals. That includes a city payroll tax proposal with a similar though not as specific pledge to roll back the city property tax rate.
"If they fight us - they fight us," Malone said Monday.
Monday's vote on the resolution wasn't a party line vote. Republican commissioner Joyce Avery joined six Democratic commissioners in voting for it.
The seventh Democratic commissioner, Henri Brooks, was absent. Avery said if the legislation is passed, she would vote against using it as a local option.
But she said the county's budget situation demands putting such an option up for consideration.
"We have to look at everything," she said. "It will not be a popular vote. But I would be remiss if I did not support this."