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VOL. 123 | NO. 42 | Friday, February 29, 2008

City, County Budget Woes Bring Different Reactions

By Andy Meek

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DON'T SHOOT THE MESSENGER: Different reactions greeted Memphis Mayor Willie Herenton (and Shelby County Mayor A C Wharton Jr.) when he presented unexpected - and negative - budget news for taxpayers. -- Photo By Bill Dries

Shelby County Mayor A C Wharton Jr. broke the news recently that the county's official budget shortfall is $2 million higher than his finance team originally had forecast. And it could climb higher still.

After he shared that news at a press conference a few days ago, the county mayor then recited a short poem to illustrate why he's long championed the idea of finding other revenue sources to make the county less reliant on property taxes.

"There's an old thing we joke about in county government: 'Don't tax him, don't tax me. Tax the man behind the tree,'" Wharton said, as a few smiles and chuckles broke out in the eighth-floor conference room of the Shelby County Administration Building.

"I want to tell you what, I've been looking for that man for six years now, and he gets away from me every time."

Surrounded by most every top county finance official and several elected and appointed office holders, the implied message was that the top ranks of county government are in agreement with Wharton's assessment that a fiscal crisis is looming and the county is doing all it can to confront it.

Not all reactions are equal

When another local mayor had to make the same turnabout and frank admission in the wake of surprising financial data, meanwhile, he got a different reaction.

Memphis Mayor Willie Herenton had to make a similar public acknowledgement a few years ago about the city's finances. The reaction he received wasn't the same as Wharton's, however, for reasons that could include everything from the different lengths of both mayors' tenures to the comparatively larger city deficit at the time.

The year was 2005, and the city of Memphis was deep in the red. And the way Herenton was greeted then compared to Wharton now is important, because it suggests the ability of both city and county governments to weather the current economic storm will be affected by, among other things, the force of their leaders' personalities.

During the 2005 fiscal year, the city's financial ledgers were covered in so much red ink that a snapshot of the city's budget deficit was revised several times until the official shortfall was determined to be $25.8 million. A round of budget cuts was soon on the table, and some Memphis City Council members were furious.

Privately, some council members complained that Herenton and his finance team had glossed over the real trouble. Herenton instituted a shakeup in that finance team not long afterward.

"How many million-dollar mistakes can you make?" said former council member Carol Chumney in an interview with The Daily News at the time. "(2005) was not a budget year represented as a crisis one for Memphis city government at the time."

Not so bad

City government ultimately corrected course. For the fiscal year that ended June 30, the fund balance in the city's general fund was up $44.5 million from the previous year.

A vindicated Herenton alluded to that budget episode from 2005 in a recent budget committee meeting with city council members.

"We had something like a ($25.8) million shortfall a couple of years ago. And The Commercial Appeal, everybody predicted it was doomsday," he said. "I said we're going to get over this. We imposed an austerity program. The next year we ended up with a $30 million surplus. But every day in The Commercial Appeal it was, 'Oh, the city's going to pop.'

"Even the governor talked about a $200 million shortfall a few weeks ago, but you see one article in the paper. There's nothing about, 'They can't manage.' You just summarily went past it. OK? I just thought I would remind you of how relative the world is."

Wharton, meanwhile, has called for a roundtable discussion to be held March 10 in the Fogelman Executive Center at the University of Memphis. Local experts and economists will weigh in on the economic troubles facing Shelby County as budget talks among county officials begin for the coming fiscal year.

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