Differences Welcome County Budget Talks

By Bill Dries

Shelby County Mayor Mark Luttrell isn’t happy that the countywide school board hasn’t sent a budget proposal to the county yet.

And Shelby County Commission Chairman Mike Ritz isn’t happy that Luttrell’s administration didn’t come out and say it would take 33 cents more on the county property tax rate after the 2013 reappraisal just to produce the same amount of revenue the county gets from the current $4.02 tax rate.

County Budget Basics

$1.2 billion: Total consolidated Shelby County budget proposal
• No pay raise for county government employees
• No layoffs of county government employees

$4.02: Existing Shelby County property tax rate in city of Memphis

$4.06: Existing Shelby County property tax rate in Shelby County outside Memphis, which is higher to pay rural school bonds used to build Arlington High School.

61 percent: Percentage of the total revenues Shelby County government takes in that comes from the county property tax rate.

21 percent: Percentage of total county government revenue from state and federal governments.

33 cents: Tax rate increase estimated to produce the same amount of revenue county government gets from the existing tax rate after the 2013 property reappraisal.

40 cents: Total tax hike, including the 33 cents to compensate for the reappraisal, that by percentage is a 9.9 percent tax hike, the maximum amount the commission can pass with a seven-vote simple majority vote.

$1.4 billion: Existing Shelby County government debt

61 percent: The percentage of that debt that comes from city and county schools construction financing over several decades.

So begins county government’s budget season with the political undercurrents present for a while now closer to the surface.

Here is the math that is emerging and is still to be discussed.

Ritz and Luttrell agree funding for the consolidated school system by the county will involve an increase.

Ritz doesn’t believe there is a nine-vote, two-thirds majority on the commission necessary to approve a property tax hike of 10 percent or more.

A 9.9 percent tax hike including the 33 cents in a recertified property tax rate amounts to a 40-cent increase from the current tax rate for a total rate of $4.42. That tax hike produces $64 million in revenue and $52.8 million of that would make up for the revenue lost in the reappraisal. That leaves approximately $11 million.

This is where Ritz and Luttrell begin to differ.

Ritz says of that amount $5 million is left for new funding for schools after the county takes care of additional funding for Juvenile Court to meet terms of an agreement with the U.S. Justice Department on court reforms and additional funding to put Sheriff’s deputies in Memphis schools that now have Memphis Police officers.

Luttrell’s version folds the $4 million or so for the new deputies into his budget, so that money is available. The rest is a commission decision.

“That could be used toward education or whatever,” Chief Administrative Officer Harvey Kennedy said, referring to the entire $11 million.

Ritz wasn’t happy that Luttrell initially didn’t say there is at least a 33-cent tax rate hike involved, until Ritz pinned him down on a specific figure.

“I don’t think all the bad news about the budget ought to have to come from the chairman,” he told Luttrell. “I think it would help everybody in this community for you to stand up and say, ‘Commissioners, you all are going to have to do at least 33 cents.’ … It’s frustrating but it comes with the territory.”

Luttrell later told Commissioner Steve Mulroy that he will “ride the fence” for now on whether the administration supports a tax hike, when Mulroy pressed him for a position.

“I am for what it takes to move our community progressively forward,” Luttrell responded. “And if that takes a tax increase to move our community progressively forward, then I would support it. I’m leaving it up to the elected officials that are asking for this increase to come forward and make a compelling presentation.”

Luttrell suggested the commission should examine the schools budget closely even though it doesn’t have line item control in the budget review and approval.

The County Commission only approves on overall amount of county funding for the merged school system. With the new fiscal year it becomes the only local funder of public education in Shelby County.

Ritz, however, differs with Luttrell on that approach to setting a funding level.

“We’ve not typically done that,” Ritz said. “They’re under no obligation to implement anything we suggest. All we do is give them a buck.”

Luttrell, however, argues the next three fiscal years will determine what the county’s “maintenance of effort” level of funding is for the new school system. That is the state requirement that the county must continue to fund the school system at a certain level and cannot go below that level unless attendance drops.

“We do have three years to reset the maintenance of effort,” Luttrell said. “I would strongly encourage you to use that three years well. This will be the only opportunity that you have to delve into the meat of that schools budget.”

On other budget matters, Ritz said he wants to explore turning over responsibility for the functions of the public defenders office and its funding to the state. Luttrell said he continues to talk with Gov. Bill Haslam and his administration about state funding, which Haslam announced last week will increase.

Luttrell said the county’s fund balance could be used for one-time-only “start up” expenses the new school system might have but only for one-time-only expenses.

Luttrell’s budget includes $500,000 for county government grants to local nonprofits. Ritz and other commissioners indicated they would like to put the amount toward schools funding. Luttrell said he would not object to that and set the $500,000 amount as a limit beyond which he would not want to see the total amount of grants go.