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VOL. 126 | NO. 124 | Monday, June 27, 2011

Pieces of the Puzzle

After weeks of debate and dissent, the City Council finalizes the 2012 budget

By Bill Dries

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Memphis City Council members left the city property tax rate at $3.19 Tuesday, June 21, as they ended their budget season.

But they added 18 cents to the tax rate on a one time basis with a separate resolution.

There is no dispute that the council took the action to fund Memphis City Schools at the level the city did before the same council cut MCS funding in 2008, four months after taking office.

What is likely to be disputed between now and the Oct. 6 city elections is the distinction council members are making about the tax hike they approved on an 11-1 vote.

“I think we’ll be fine. I think we need to explain to the voters and explain to the city that we’ve made some major moves,” said council member Bill Morrison.

“We’ve changed the entire accounting picture of city government.”

Morrison was referring to other parts of the set of budget actions that included a $13 million voluntary buyout or retirement fund to be offered to city sanitation workers and the layoffs of over 100 city employees as well as the elimination of more unfilled but still funded positions in city government.

Other council members called it the “biggest rightsizing of city government ever.”

They used the exact phrase in separate interviews after the set of budget votes was completed.

Memphis Mayor A C Wharton Jr., left, addresses City Council members with Chief Administrative Officer George Little during budget deliberations at City Hall. The city passed its 2012 budget about 10 days before it goes into effect.

(Photo: Lance Murphey)

Wharton described the process as “torturous”

“I’ve been through a lot of budgets,” said Wharton who was Shelby County Mayor before becoming Memphis Mayor. “This one really tried me. This one was rough.”

A proposal by council member Harold Collins two weeks ago to raise the city property tax rate by 18 cents failed on a 4-8 vote.

The council’s 11-1 vote two weeks later was a stunning if qualified come back for the general idea that came after a day at City Hall spent with council members in various clusters even during the council session working out details among themselves and with Wharton. Council member Jim Strickland was the lone “no” vote.

“If we came up with some money would I use it to come down on the furlough days. My answer was no,” Wharton recalled when asked what was discussed in the huddles. “The cuts we had up here we had to stick with that. Then it got into the tax rate, whether it should be a one time tax assessment or restoring the 18 cents.”

Council member Shea Flinn originally proposed adding the 18 cents to the tax rate without a distinction that it would be one time. The proposal came after an earlier move by Flinn to put a referendum to raise the local sales tax on the Oct. city ballot failed to get even a second. And earlier than that, Flinn had proposed a one time only tax hike with a separate “education tax” bill.

Flinn and council attorney Allan Wade argued that no increase in the property tax rate is permanent in what Flinn conceded and Wharton agreed was largely a matter of semantics.

“Quite frankly, you set the tax rate every year,” Wharton said. “You could, if you wished, call every tax increase a special assessment if you wanted to because you redo the tax rate every year.”

After council member Reid Hedgepeth sought clarification and said he couldn’t vote for anything less than a guarantee of a one time only tax hike did the move for a separate 18 cent resolution take shape.

The agreement reached was a concession by council members who wanted a “rightsizing” of city government all in one fiscal year – the one beginning July 1. The Wharton administration which argued it had the same goal but over several fiscal years agreed to put some specific terms to the more gradual approach.

That includes a key provision put in writing that the council will be involved in determining how any savings are applied and where they are applied.

Those terms were what some of the more intense conversations behind the scenes were about according to Wharton.

“It will be seen as property taxes gong up. It’s hard to debate that,” Wharton said. “I would much prefer to suffer the approbation of those who say you raised taxes then those who said you had a just obligation ordered by the courts and you thumbed your nose and didn’t pay it.”

Council members around in 2008 felt betrayed that the savings they carved out of the city budget were simply applied by the Herenton administration to other areas of city government. There’s a new mayor since then, but some on the council wanted to make sure City Hall’s administration crossing political gravity doesn’t do the same thing to the savings they now have a specific plan for.

Leaders of the municipal unions and their members were a strong and vocal presence in council chambers during the nearly seven hour session.

The council was never considering a proposal that died two weeks ago to privatize sanitation services. But numerous sanitation workers chastised the council for even thinking about taking such a step.

The council did approve a $13 million voluntary retirement fund for sanitation workers to be capped at between $40,000 and $60,000 per worker depending on their age and years of service with the city.

The fund would be financed with an advance from the city’s general fund that would be repaid with revenue from the city’s solid waste fund over time.

Wharton said he is opposed to privatization of sanitation services. His administration, before the current budget season, had proposed a “managed competition” in which sanitation workers might become private contractors. But the managed competition proposal was not put forward by the administration this budget season.

Michael Williams, vice president of the Memphis Police Association, rallies public workers outside Memphis City Hall during a day of budget deliberation. Hundreds of workers marched outside Memphis City Hall to try to prevent jobs and benefits from being cut.

(Photo: Lance Murphey)

Union leaders representing the sanitation workers were interested in what some council members were alternately referring to as a buyout plan. But they questioned whether it would lead to privatization. They’ve also been adamantly opposed to Wharton’s managed competition concept as well.

Wharton also said his administration is talking with firefighters union leaders about a plan by which firefighters would not have to take 12 unpaid holidays in the next fiscal year as other city employees will. Wharton said the union has pledged to try to find ways to make up the amount of savings the city would realize in other ways. Wharton said as long as his administration gets the same dollar amount of savings, he’s open to the alternatives. And he said the door is open to the city’s other municipal union to make similar proposals in the next two weeks on the unpaid holidays or furlough days.

Plans to lay off 125 city workers remained in place despite the numerous changes in the budget.

The new fiscal year begins July 1. The council approved the minutes of the meeting minutes after taking the final vote making the actions final. The council votes came the day after Shelby County Commissioners ended their budget season as well.

There is nothing like getting near a date circled in red on a calendar to obscure a complex goal – say, a balanced city operating budget of more than $600 million.

As the July 1 start of the new fiscal year nears, Memphis City Council members have debated many of the big questions about what local government’s role should be and what it should and can provide.

They’ve also spent a lot of time moving around blocks of less than $1 million within the much larger budget framework.

For years, voting blocks on the council have tried to extend their reach to a seven-vote majority to change the spending priorities of each local government on a broader scale.

But what happens during such efforts is someone changes the subject – repeatedly. And the subject is usually changed by one of those small blocks of funding being guided to or from a certain place.

As a political tactic – intentional or unintentional – it almost always works.

The budget process has been especially complex for the City Council as it enters a re-election summer in which the 12 sitting members of the council are all expected to seek re-election. That’s four years after they voted to cut Memphis City Schools funding, rolled back the city property tax rate by 18 cents and then lost every court battle over the MCS funding cut.

“We did it for what we thought was in the best interest of all Memphians,” council chairman Myron Lowery said in April as budget season began. “We thought we would win. We lost. It’s now time to pay the bill.” The bill is $60 million in recurring revenue.

And the one-time 2008 amount of $57 million is still on an informal installment plan over several years.

It was council member Harold Collins, who had once expressed hope that the 18-cent rollback would be followed the next year by another cut in the tax rate, who proposed restoring the 18 cents to the tax rate.

Memphis City Council member Shea Flinn listens during a day of budget deliberations at City Hall.

(Photo: Lance Murphey)

Council budget committee chairman Shea Flinn had earlier proposed a one-time 39-cent tax hike and education tax bill to homeowners.

Meanwhile, council member Kemp Conrad, the only member of the council not on the body when it rolled back the 18 cents, offered the only comprehensive budget proposal other than that from Memphis Mayor A C Wharton Jr.’s administration.

Conrad replaced $60 million in one-time revenue in the Wharton plan with privatization of some city services and cuts in city jobs including an attrition plan for the Memphis Fire Department.

“I think an election year is the exact time we should be having the discussion about what we want our city government to look like,” Conrad said. “We can no longer afford sacred cows.”

Conrad also accused Memphis Fire Fighters Association leaders of using “scare tactics” with fliers warning that if citizens called the fire department the budget cuts might mean no one would respond.

Memphis Fire Director Alvin Benson said the proposals would not jeopardize public safety.

Council member Joe Brown, who has been vocal in opposing any cuts of any kind, said the union fliers weren’t scare tactics.

“A scare tactic is when your house is on fire and you can’t get a fire truck to come,” he told Conrad.

Brown had also warned that city employees facing layoffs could snap and kill someone.

When Conrad got to the part of the plan that would have offered buyouts to sanitation workers and privatized city sanitation services, the budget deliberations reached a fundamental political question that city and county governments have been grappling with in recent years: how to manage – if not cut – the cost of a government whose dominant expense is personnel.

The local of the American Federation of State, County and Municipal Employees that represents sanitation workers reached for the “I Am a Man” signs, invoking the memory of the 1968 sanitation workers strike and the assassination of Dr. Martin Luther King Jr. during that strike.

Council member Reid Hedgepeth joined Conrad as the object of the union’s wrath when he said he wasn’t alive in 1968 and he had a black roommate in college.

“I was born in 1977. … We don’t know that period,” he said. “We’ve got to find $60 million. It’s not fun. But it’s something we better all start thinking about.”

“I think we need to take a step back and remember how all of us got here,” cautioned Collins, who was 9 years old in 1968. “The reason why it is so emotional even though I wasn’t able to march and I wasn’t able to do the sit-ins is because I am a product of what they accomplished.”

Leaders of five municipal unions responded the next day by vowing to defeat Conrad and Hedgepeth in the October council races.

“Councilman Conrad and Councilman Hedgepeth both took it upon themselves to attack the memory of Dr. King, calling the sanitation workers ‘sacred cows,’” said Shelley Seeberg, the latest in a long line of administrators the AFSCME local has had over years of turmoil within the union’s Memphis leadership. “Well, I am here to remind both of them that the workers of this community are no different than the workers of 1968.”

The dustup over the city’s most potent labor dispute, even 43 years later, shifted the spotlight away from the specifics of Conrad’s plan.

Backers of Conrad’s plan talked of a show of support at City Hall. But when the first council meeting of June rolled around, it was municipal union members who pitched a tent outside the building, passed out signs to their supporters and filled the council chambers.

A YouTube video from a union supporter flashed between images of Hedgepeth and Henry Loeb, the mayor during the 1968 strike.

The political spotlight was diffused over several other political hotspots.

The union leaders focused on tax breaks and other incentives used to lure Electrolux and Mitsubishi plants to the city.

“Councilmen Conrad and Hedgepeth want to take away from the livelihood of the sanitation workers,” Seeberg said. “But they are fine with corporations throughout Memphis getting property tax breaks.”

Memphis Police Association vice president Michael Williams said the municipal unions would stick together. And then he threw into the rhetorical pot his assertion that crime is going up in Memphis despite crime statistics. He mixed it with the image of council members and “their big houses and their gated communities.”

“Crime is not down,” Williams said. “I think there’s a way that you can adjust figures to make it appear that way. … They are finding bodies all over the place. People are not as safe as people would have you believe.”

Conrad later pointed out that 40 percent of the city’s firefighters don’t live in Memphis and more than half of the Memphis police force doesn’t despite their union leaders backing the 18-cent tax hike.

He wondered aloud whether there should be a residency requirement at least for public safety jobs putting him on the same side of the residency issues at least for the time being with council member Wanda Halbert.

Wharton had talked in his first budget season of gradually outsourcing sanitation services in such a way that current city sanitation workers would become private contractors. But he came out against Conrad’s specific privatization proposal. Wharton’s comments were a call for a more gradual method of putting the city’s financial house in order.

“Give the people of Memphis a down payment, an installment plan as to how we are going to get this budget down,” Wharton said. “It’s going to have to be surgical as opposed to using a cannon to just blow holes in it.”

PROPERTY SALES 0 133 1,342
MORTGAGES 0 131 1,047