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VOL. 127 | NO. 110 | Wednesday, June 6, 2012

Council Lowers Property Tax Rate, Approves $609M Budget

By Bill Dries

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Memphis City Council members approved a $3.11 city property tax rate Tuesday, June 5, to fund a city operating budget of $609,802,357 and Memphis City Schools to the tune of $64,819,307.

The split council vote came nearly 14 hours after the council’s day started at City Hall with a budget committee session in which the basic elements of the ultimate budget compromise were mapped out before noon.

The rest of the discussion that followed before the full council was about amendments – some that passed and some that failed – and then several attempts by council members to stop the torrent of amendments and go to a vote.

The basic elements of the budget that takes effect July 1 with the start of the fiscal year were using $19.6 million from the city’s $81 million reserve fund; 10 cents on the city property tax rate to fund Memphis City Schools for the last fiscal year the city is obligated to fund MCS before it merges in August 2013 with Shelby County Schools; and the use of $20 million in one time funding from the city’s OPEB (Other Post Employment Benefits) trust fund.

With that, the council followed through on early and pervasive indications that it would not get anywhere near the 47-cent property tax hike proposed by Memphis Mayor A C Wharton Jr. to fund MCS one last time. The tax hike was to be to fund nothing but MCS.

The $3.11 tax rate not only doesn’t include a tax hike, it is an eight-cent reduction from the current rate of $3.19. And the final budget amount approved is $19 million lower than the $628 million budget proposed by Wharton.

Wharton referred to it as a “gap year” budget in which the council opted for the use of one-time-only funding from the city reserve and the OPEB trust to fund MCS one last time.

Wharton had argued the city will face tough challenges from quarters other than the school system in the fiscal year after the one that starts next month.

“This budget doesn’t do anything for the long term. Everybody recognized that. The hard work still lies ahead,” Wharton said. “One good thing is that I will not have to borrow from the general fund to pay the schools.”

Neither Wharton nor council members were happy about the outcome.

Wharton says cuts in city operations are still a factor with the city facing the prospect of less revenue from a 2013 property reappraisal in which home values for tax purposes are expected to generate less revenue for the city. And the city faces increased debt service stemming from a restructuring of the city’s debt two years ago that is estimated at between $25 million and $30 million.

Several council members said the budget season was a continuation of the two years before when their efforts to “rightsize” government and make changes in the scope and size of city government either didn’t have seven votes or got watered down in the execution of agreements that were supposed to be steps toward a smaller city government.

Most of the flood of amendments at the full council session dealt in amounts of less than $1 million each.

The council voted to remove $300,000 in city funding for speed cameras that can clock motorists. The administration argued cutting the cameras in the proposal by council member Lee Harris meant cutting an estimated $700,000 in revenue the cameras would generate.

Harris also garnered enough votes for another amendment to close Davy Crockett, Pine Hill, Riverside and Whitehaven municipal golf courses for three months during the winter. The four golf courses were picked because unlike other city golf courses, they don’t turn a profit.

The administration estimated it would mean savings to the city of $42,099 after factoring in city maintenance that would have to continue on the courses even during the winter.

The estimate was the latest in a set that drew the ire of several council members. Initially, the administration wanted to close the golf courses entirely and estimated it would save the city $946,000. Then the estimate was $4 million.

Council member Harold Collins said the different numbers might be an attempt by the administration to discourage the council from doing something differently.

“I’m sick and tired of playing three card monte in this room,” he said. “When will we get serious about this? … Everybody’s running over saying you can’t do that because we’ve got to cut the limbs. We’ve got to cut the grass at one time. You don’t even cut the grass in the summer time. We’ve got limbs hanging over the parks today. … We’re going to figure out how much it costs to run golf courses.”

The council restored four libraries the administration had proposed closing. The original estimate was the closing would save the city $1.7 million and later changed that to just more than $1 million.

Council member Joe Brown was frustrated that the property tax rate was being lowered.

“You’re losing money,” Brown said. “It takes that $3.19. That’s for sure. It’s almost senseless that we are going to decrease the tax rate.”

Council member Kemp Conrad said the use of OPEB funds was a “bad idea” and that better ideas for cuts have to come from the administration.

“I think what we’re seeing now is we are at the bottom of the barrel of what we as council members can do,“ Conrad said.

The council voted down an amendment by council member Janis Fullilove that would have kept employee contributions to health insurance premiums at 27 percent. The employee share will rise to 30 percent over the next two fiscal years.

Fullilove attempt to recover funding for one of four ladder trucks the Memphis Fire Department cut. She initially proposed restoring $150,000 to fund the truck and personnel to work on the truck. When Memphis Fire Director Alvin Benson told Fullilove it would take $2 million, Fullilove quickly amended the amount.

“That’s fine with me,” she said. “Sounds like a good number.”

It wasn’t fine with Harris who seconded the motion. He withdrew the second when he heard the $2 million figure. By then council member Wanda Halbert suggested adding a second ladder truck at a firehouse in her district.

Fullilove agreed to add that to her proposal which was voted down.

Halbert, meanwhile, proposed and the council approved $2.5 million in city funding for the EDGE economic development program that until Tuesday faced uncertainty when it came to city funding. The money is expected to come from the city’s share of revenue from the sale of the old Defense Depot property beyond the $9 million in revenue from the sale the council found other uses for in the balancing of the budget.

PROPERTY SALES 68 162 2,781
MORTGAGES 60 97 1,880
BUILDING PERMITS 148 769 6,470
BANKRUPTCIES 61 172 1,149