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VOL. 124 | NO. 80 | Friday, April 24, 2009

Herenton Urges Council To Restore 82 Cents To Tax Rate For Schools

By Bill Dries

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Memphis Mayor Willie Herenton has urged the Memphis City Council to restore 82 cents to the city’s property tax rate to help fund the Memphis school system.

Herenton made the request this afternoon in a letter to City Council chairman Myron Lowery.

“At the risk of appearing to be defensive or offensive, I want to make it very clear that the administration has developed a sound budget and we are not going to play games over schools funding,” the letter reads. “In my judgment, the council should not have decreased the funding for city schools and should not have lowered the tax rate.

“You ignored my advice and some council members are threatening to undo a balanced FY 2010 operating budget to hedge your mistake. My advice to the council is to reinstate the previous 0.82 tax rate allocated for schools and let’s move on to other priorities for the city. In the final analysis, we need to do what is best for children.”

In passing the city operating budget for the current fiscal year, which ends June 30, the council cut $66 million of the $89 million in city funding to the school system and rolled back the city property tax rate.

The funding cut also prompted a Chancery Court lawsuit by the school system against the city. The school system contends the city cannot reduce its level of funding under the state’s “maintenance of effort” law. The council contends it is not required to.

Chancellor Kenny Armstrong ordered the city to pay the school system $57 million by the end of the current school year. But he later stayed the ruling pending an appeal of the decision by the city. Whoever loses at the appeals court level is expected to appeal the case to the Tennessee Supreme Court.

Herenton’s recommendation would make the court fight on the principle of “maintenance of effort” a moot point.

Herenton’s letter came the day after the council’s budget committee opened its hearing on his budget proposal. Some council members advocated rearranging Herenton’s budget to make provisions in case the city is forced to pay the judgment.

Lowery produced a legal opinion from Council attorney Allan Wade this afternoon in which Wade opines that the failure to include the $57 million judgment in the operating budget "does not make that budget unbalanced or illegal."

Herenton in his annual budget message Tuesday proposed a balanced budget with no tax hike and 3 percent raises for city employees. Restoring the 82 cents would represent an increase in the tax rate over the current fiscal year, when the council reduced the rate, but ultimately the property tax rate will be recalibrated to account for an overall growth in property values in the latest reappraisal for property tax purposes.

As a result, the certified tax rate is expected to be lower to abide by state law, which mandates that the reappraisal produce the same amount of revenue for city government – no more and no less.

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