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VOL. 123 | NO. 241 | Wednesday, December 10, 2008

City Foresees $8.8M Deficit

Herenton declines comment for now

By Andy Meek

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Memphis Mayor Willie Herenton already has promised no tax increase will be forthcoming next year, a pledge he made to Memphis City Council members during a mayor-council retreat last month at the University of Memphis.

But the national economic picture remains grim, and the complete plan of action that local elected leaders will use to combat it remains unclear. Here’s one number that will loom large over anything city officials decide to do: $8.8 million.

That’s the approximate size of the deficit the city can expect to see at the end of the current fiscal year, which closes in June. It represents a delicate prediction, since the number does not include any surprises over the next six months.

It’s also an increase from the $6.3 million deficit reported to the City Council last month by city finance director Roland McElrath. The number grew to $8.8 million because on the same day McElrath made his presentation, the council approved $2.5 million in utility assistance for cash-strapped customers of Memphis Light, Gas and Water Division.

Toward efficiencies

Herenton, through a spokeswoman, declined to speak with The Daily News about the myriad financial challenges facing the city, which he said at last month’s council retreat would make next year the toughest of his time in office. But his reluctance to talk about the challenges at the moment is because he and his staff are in the midst of drawing up a plan to meet them.

McElrath gave an idea to The Daily News of what Herenton will propose.

“We’re continuing to refine a proposed buyout plan that would be offered to city employees, but at this point I can’t really go into the details of that proposal,” McElrath said. “That information will be shared with the City Council in the next 30 to 60 days.”

His counterparts in Shelby County government are looking at a similar plan of attack. At a forum held at the Benjamin L. Hooks Central Library two weeks ago, Shelby County Mayor A C Wharton Jr. told an audience of roughly two dozen people that county government at the moment is looking into the possibility of handing out an unspecified number of pink slips.

“I don’t mind telling you we’re looking at more layoffs on the county side,” he said. “So, yes, we’ve got to do more with less in government.

“I just looked at my calendar today on what I dealt with today. (County Chief Administrative Officer) Jim Huntzicker and I dealt with a dispute between the city and county – and these are professional disputes – on how the health department ought to be funded. I spent about an hour on that. It’s one health department serving the city and county, but we’ve got it split. We’re trying to resolve that. It’s the efficiency piece.”

He added that the path toward greater stability is not necessarily in finding the cheapest way to operate government, but the most efficient.

What lies ahead

Property taxes, meanwhile, are the fuel that powers the city and county’s financial engines, which is why next year’s countywide reappraisal of property remains another closely watched question mark for both governments.

McElrath said the city anticipates getting some preliminary information about the results of the reappraisal sometime in early 2009.

Shelby County Assessor of Property Cheyenne Johnson will be overseeing next year’s reappraisal, which occurs every four years in Shelby County. One reason next year’s effort is shaping up to be particularly difficult is that the assessor’s staffers say they’ve had significantly fewer residential sales to use as comparisons in determining market values for properties.

To get a small idea of that drop, Shelby County saw 960 home sales during November. That figure represents a 24 percent drop from the county’s 1,265 sales in November 2007, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.

“We have met with the new assessor on a couple of occasions to talk about the reappraisal, and we’ve actually requested some preliminary data on the reappraisal,” McElrath said. “The final certified (tax) rolls won’t be released until April 20, but we’ll get the preliminary information we’ll use to develop our property tax revenue forecast for 2010.”

Chandler Reports is a division of The Daily News Publishing Co.

PROPERTY SALES 72 282 10,218
MORTGAGES 89 303 11,249
BUILDING PERMITS 288 762 22,934
BANKRUPTCIES 45 316 6,535