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VOL. 123 | NO. 98 | Monday, May 19, 2008

Uncertainty Lingers for County Budget

By Andy Meek

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ENTREPRENEURIAL SPIRIT: Shelby County Mayor A C Wharton Jr., shown speaking with county attorney Brian Kuhn, left, wants to create a panel that includes business sector representatives to evaluate new revenue options for the county. -- PHOTO BY BILL DRIES

The size of Shelby County government’s budget shortfall has been revised three times since the beginning of this year. Each time, the number has grown.

The county’s deficit first stood at $10 million. The long-awaited budget plan for the fiscal year that begins July 1, which county Mayor A C Wharton Jr. presented last week to the Shelby County Board of Commissioners, is built around a $29 million shortfall.

That uncertainty demonstrates the precarious and potentially painful financial position in which the county finds itself.

And the financial uncertainty isn’t over yet.

A tangled wood

The budget proposal Wharton unveiled for commissioners Wednesday is the product of weeks spent by the administration on finding a way of balancing the budget without a tax increase and with the right balance of cuts that can win a consensus on the commission.

But the future direction of the housing market and its corresponding effect on property values is one of the larger question marks still hanging over the commission’s budget discussions.

The certified tax rolls the county recently received from Shelby County Assessor of Property Rita Clark showed property values did not slip this year as much as the county administration anticipated, Wharton said. But he added there’s no indication that the results of next year’s countywide reappraisal will give the county body a similar breather.

Bob Patterson, the county trustee who died in January of a heart attack, was among the many officials in county government who have been forecasting recently that the county’s overall tax base will shrink in value after the 2009 reappraisal.

“As was originally shared with the commission, we conservatively estimated a 1 percent reduction in (the current tax rolls), which equaled out to $5 million,” Wharton told commissioners. “To be candid, one of our most troubling uncertainties was the impact the ongoing housing and foreclosure crisis would have on property tax receipts locally. We are not out of the woods on this issue by any means, especially with the coming year.

“... It is worth reiterating that the budget I have been discussing is solely for 2008-2009. It does nothing to deal with the looming forecast for 2010.

“In addition to working off the new appraisals in 2010, I see nothing on the horizon that indicates we will be pulling out of what I believe to be a recession.”

Brain-picking time

In the coming days and weeks, county officials plan to reach out to the private sector and to business leaders in Shelby County for help wading through the financial pain associated with this year’s budget.

To that end, Wharton wants to see the creation of something he’s calling the Committee on Future Revenue Needs for Shelby County Government. The resolution the county mayor soon will present to the commission creating that ad hoc body will call for representatives of sectors including municipal finance, the banking industry, civic organizations and others to come around the table and begin talking about solutions.

As part of that committee’s mandate, Wharton envisions instructing it to return a set of findings within a 120-day period.

First step: admit there’s a problem

Beyond that, some Board of Commissioners members say they still think the administration needs to do a better job of convincing people how troubling the county’s current fiscal picture really is.

“I’ve gotten some e-mails over the past few days from people asking for raises for county teachers,” said commissioner Sidney Chism. “I just don’t think people realize the crunch we’re in in county government.”

Said commissioner Mike Ritz: “We need to convince this community we have a budget problem. And I don’t think we’ve done that yet.”

One place any new revenue apparently won’t come from is the state. Wharton has taken a variety of ideas for new revenue possibilities to the Tennessee General Assembly in recent months but has not found enough support among legislators for the ideas to amount to much.

Next step: take action, remove obstacles

The county mayor expressed his frustration to The Daily News shortly before his budget presentation last week.

His comments were made against the backdrop of a bill filed in the state Legislature earlier this month relating to the county’s charter change efforts the county administration sees as encroaching on its local authority.

“It’s really odd,” Wharton said. “On the one hand, when we ask them to get involved, to help us out on revenue, everything we take up there it’s, ‘No, no, no. That’s not good.’ But they’ve never said, ‘Here’s something that is good.’ They’ve never proffered a solution.

“The Legislature really puts counties in a horrible bind. And when we try to become more efficient to meet their mandates – with shrinking revenue bases – they get in our way.”

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