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VOL. 123 | NO. 38 | Monday, February 25, 2008

Wharton Says County Budget Shortfall At $16.5 Million

By Andy Meek

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At a hastily called afternoon press conference Friday afternoon, Shelby County Mayor AC Wharton Jr. recalled how his visit to Starbucks that morning was ruined when he picked up a copy of the New York Times. He was greeted with an article in the paper’s business section that mentioned his friend and fellow Memphis lawyer Stuart Breakstone.

Breakstone, who recently paid $65,000 out of his own pocket at the closing of the sale of his home to cover the shortfall between what he owed and what the home sold for, was among those in attendance at Friday’s gathering. His situation was not the main thing Wharton intended to address reporters about at that meeting in the eighth floor conference room in the Shelby County Administration Building.

But it served as a real life example of Wharton’s main topic for the day: the gloomy financial picture of county government.

With a somber note in his voice, Wharton kicked off the meeting with two bits of dismal news. The first of those was that the county will be deeper in the red this year than officials first expected.

“You all have printed and covered and published that we are entering the budget cycle with a projected deficit of $14.5 million,” he said. “We have been recalculating and recalculating and looking at what growth, if any, we might have, and today we are projecting a hard and almost certain shortfall of $16.5 million.”

That led to and was part of the reason for the second announcement. Because of factors including the area’s soaring number of foreclosures and the resulting impact on property tax revenue, Wharton wants to hold a roundtable discussion with industry leaders and businesspeople March 10 at the University of Memphis.

That discussion, to be held in the Fogelman Executive Center, is intended to accomplish several things. Experts unaffiliated with county government, for example, will give an outside perspective on economic problems the county faces. And in a last-ditch effort before the start of what Wharton and others say is shaping up to be one of the county’s most ominous budget-writing seasons, the county mayor wants to hear ideas from a broad spectrum of people on how to navigate the current financial situation.

“This is something we haven’t done before,” he said.

Breakstone listened quietly for most of the discussion. At the end, he asked whether the answer to the county’s budget and economic woes might be consolidation.

The article in that day’s New York Times was mainly about efforts to get federal legislation created that rescues homeowners like Breakstone who are stuck with mortgages worth more than their homes.

“If you look and take it in relative terms, the people who do not have the economic resiliency that Stuart has – what in the world are fixed income and low income people going to do? What in the world are they going to do?” Wharton asked.

While he spoke, one of his aides passed out copies of that day’s New York Times to members of the press.

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PROPERTY SALES 83 363 9,932
MORTGAGES 91 378 11,692
BUILDING PERMITS 213 788 21,098
BANKRUPTCIES 50 213 6,650

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