VOL. 128 | NO. 76 | Thursday, April 18, 2013
Wharton Proposes 28-Cent Tax Hike
By Bill Dries
The way Memphis Mayor A C Wharton Jr. views the city’s budget trajectory is shaped by a City Council with different fiscal ideas that have consequences the city is still paying for.
The way City Council budget Chairman Jim Strickland sees it, Wharton has proposed property tax hikes multiple times since taking office in 2009 instead of seeking to fundamentally change city government from the inside.
On the day that Wharton pitched a $622.5 million budget with a 28-cent property tax rate increase to the council, no one believed the budget for the fiscal year that begins July 1 will look exactly like the plan in the 189-page budget book.
“None of us will recognize it three months from now,” Wharton said Tuesday, April 15, after a brief presentation to the council in which he left before council members had a chance to comment or ask questions.
Some on the council were offended.
“I think what we got was a recycled speech that we’ve now heard about three times in three years,” council member Kemp Conrad said. “It wasn’t a budget.”
Wharton said the normal mayor-council exchanges at the budget address can lead to “trying to make a budget on sound bites and scoring points.”
“It is not a budget meeting. It is a budget presentation. That’s all the charter calls for,” he added. “It is not the place to get into any in-depth discussions. You end up giving out fragmented information.”
Strickland and Wharton didn’t even agree on whether the budget proposed is smaller than the current city budget.
Wharton said the $622.5 million operating budget proposal is smaller than the current adopted operating budget of $648.4 million. Strickland said the current operating budget total is $596 million. So Wharton’s budget proposal represents an increase.
“It’s just a flat-out untruth. That’s simply not true,” Wharton said as he pointed to a decline in city employees as well as dollar amounts. “The numbers went down and the budget went down.”
“This is about the fourth time the mayor has asked for a tax increase,” Strickland said after Tuesday’s council session. “We’ve always been able to work through it without raising the taxes. … We need to cut expenses at City Hall before we need to raise taxes.”
Wharton gives the council credit for getting the city to the lowest property tax rate in 22 years. But he faults the current council, most of its members taking office in 2008, for its first big decision in 2008 to cut schools funding and roll back the property tax rate.
Wharton’s Budget Proposal:
$622.5 million: Proposed General Fund Operating Budget
2.3 percent: Proposed Pay Raise for City Employees effective in January
$3.39: Proposed City Property Tax Rate Budget Plan Is Based On
$3.11: Existing City Property Tax rate
July 1: Start of the new fiscal year
“Against the advice of seasoned politicians, shortly after I came over here and saw which way the schools court ruling was going I said let’s just hit this thing head on,” Wharton said of his proposed tax hike then, which the council rejected. “We had to resort to refinancing debt and we’re now paying the price for that and will pay the price for any number of years.”
The 28-cent property tax rate hike covers $10 million in added debt service the city begins to pay starting with the new fiscal year July 1 because of the debt restructuring.
“There are consequences to the decisions that we make and one of those consequences is larger debt service payments,” Wharton said.
Wharton also included in his budget proposal a 2.3 percent pay raise for all city employees that would take effect in January, the halfway point in the city fiscal year.
Wharton later referred to it as a start on the “restoration” of a 4.6 percent pay cut city employees took in 2011.
“I feel that the employees have more than met their share of the shared sacrifice,” he said. “They have not had a raise in those years so we don’t call this a raise. This is a partial restoration. … I just think it’s the right thing to try to do.”
Shelby County Mayor Mark Luttrell in his county government budget proposal to the Shelby County Commission earlier this month proposed no pay hikes for county employees as well as no layoffs.
Meanwhile, Wharton advocated for a citywide sales tax hike referendum the council votes on this summer that would fund a 20-cent rollback in the city property tax rate.
“Let’s get behind some measure that will take some of the pressure off the property taxpayers.” Wharton said. “Property taxpayers are at a disadvantage. You can’t move your property out of Shelby County.”
He conceded and Strickland emphasized that the property owners themselves can move.
“Our high property tax is one of the big reasons people are leaving our city,” Strickland said. “We are losing population. … We need to reverse that trend.”
Council budget committee hearings begin Tuesday, April 23.