VOL. 128 | NO. 74 | Tuesday, April 16, 2013
Budget Season Opens With Wharton Proposal
By Bill Dries
Memphis Mayor A C Wharton Jr. presents his budget proposal Tuesday, April 16, to the Memphis City Council for the fiscal year that begins July 1.
And council members will probably be listening closely for one dollar amount in particular and how Wharton proposes to deal with it.
The city starts the budget season with an estimated $25 million hole.
Of that total, $15 million is the amount of property tax revenue the city loses as a result of the 2013 property reappraisal from what it gets from the current city property tax rate.
And for the new fiscal year, the city has $10 million more in debt service as a result of a debt restructuring from several fiscal years ago.
The council meets at 3:30 p.m. at City Hall, 125 N. Main St.
Wharton’s presentation begins the budget season at City Hall. With a property reappraisal that for the first time in anyone’s memory means a drop in revenue from the existing property tax rate part of the political discussion will be the recertification of the existing city tax rate.
The city will ultimately submit a new property tax rate to the state for certification that produces the same amount of revenue the existing rate of $3.11 produces. In other reappraisal years, that rate has either stayed the same or gone down.
If the rate goes up to produce the $15 million lost in the reappraisal, the political question for those who favor that is whether they want to stick with an explanation that technically it is not a tax hike.
Shelby County government leaders are having the same discussion as they deal with a loss of revenue from the same reappraisal.
Commissioner Terry Roland asked Mayor Mark Luttrell if making up the lost revenue on the tax rate is a tax hike. And Luttrell answered carefully.
“People make compelling arguments on both sides of it,” Luttrell told Roland. “You will not pay any more in taxes. If we raise the tax rate … it is indeed an increase in the tax rate.”
But unlike Luttrell and county leaders, Wharton and the council will no longer be funding public education. The city’s obligation has been to the tune of $68 million and that obligation ends in the new fiscal year with the schools consolidation.
The use of that revenue proposed by Wharton as well as the council will also be watched closely as the budget season progresses.
Some on the council had also talked of another rollback of the city’s property tax rate with a half percent citywide sales tax hike.
But consideration of the referendum ordinance that would put the tax hike to city voters has been delayed until after the start of the new fiscal year on July 1. The referendum, if approved by the council, would be in the late summer or fall.
The sales tax hike would generate an estimated $47 million in revenue for the city. And $20 million of that would be used to roll back the city property tax rate 20 cents under terms of a resolution that accompanies the referendum ordinance. The other $27 million would be used for a city-run or contracted expansion of pre-kindergarten in the city.
“Mechanically, it’s absolutely still doable,” council member Shea Flinn said last month of the possible tax roll back. “Politically, it’s a much closer call and a much higher hurdle.”
Also on the council’s agenda Tuesday is a planned development on the northwest corner of Greenlaw Avenue and North Fifth Street in Uptown for the Memphis College Preparatory Elementary School. The charter school at Greenlaw and North Sixth Street would expand with parking at the new lot and could possibly expand its building with the planned development.
The council is also scheduled to discuss a resolution that would provide severance benefits for employees of the city’s Motor Vehicle Inspection Bureau. The council voted last year to end funding of the bureau after June 30, the end of the current fiscal year.
That would mean either Shelby County government would take over the responsibilities for auto inspection or the state of Tennessee would. State officials have said the earliest they might be able to do that is in two years and that they hope the city and county can work out something in the interim.
County leaders have shown no interest in taking on vehicle inspections or paying the city to continue to do it.